Last October my husband and I spent a lot of time and money to purchase my hubby’s childhood home in Southern California from his parents. Everything went through at the moment we stepped on a plane for China. So far it is going well. Our entire family spent winter break at the house for over two weeks and now we have a wonderful family taking care of the home and we can visit whenever we want. Since October, mortgage rates have dropped significantly so I was shopping around for a refinance. Today we will be doing the signing with the same lender we are with now for a Fannie Mae to Fannie Mae streamline loan. Our interest rate is going from 5.875% to 4.875% and we will be saving over $200 a month on interest.
Personally, I did not know that there was an option of the Fannie Mae to Fannie Mae streamline loan, but I talked to my lender in January about refinancing and they said that we qualify for a streamline loan Basically, there is no need for a new appraisal and broker fees were waived since we are just doing the refinance with the same bank. Some fees cannot be avoided, such as a new title search and title insurance. They also ran a new credit check, but the process was very easy overall since they had pretty much all of our information.
After running a bunch of calculations on the costs I determined that it was still worth it to refinance because we would be saving over $80,000 on interest over the lifetime of the loan with the 1% difference in the rate. We will recover our costs in a little less than 2 years and since we intend to keep the home for a long time it is not a bad deal.
Also, since we only paid our old loan for 3 months, we are not really stretching out the loan by all that much. Now if we apply the extra money we are saving towards the principal every month, we will pay off the loan six years early so I consider this a good move for us.
I am not sure if interest rates will move even lower, but 4.875% is a rate I am willing to stick with for a while and if it really goes down to 3.5 I could just refinance again. If you are interested in finding out about the Fannie Mae to Fannie Mae streamline refinance you can check out this product matrix at Fannie Mae.
The basic requirements are these:
1. Your loan must be originally fully documented and underwritten by Fannie Mae guidelines. It has to be held by Fannie Mae right now.
2. You cannot have late payments within the 30 days you are applying
3. You have to submit to a credit check, and your credit score needs to be 720 – 740 if your loan is more than 90% of the value, and 660 – 680 if your loan is less than 75% of the value. Basically, your credit score has to be fairly good.
There are also a bunch of variations on the requirements based on the type of property and loan to value calculations that you have to read the Product Matrix to figure out. I think this could be helpful to people who have homes that lost value dramatically because they really do not do an appraisal. I would have been okay with an appraisal since we just bought the home 3 months ago and prices haven’t slid 20% in 3 months, but I know a lot of people who bought in 2006 or 2007 who have lost 20% to 30% and can’t take advantage of the great rates now. My suggestion is to ask your lender if you qualify for a streamline, and you may be able to save thousands of dollars.
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5 comments ↓
I wish I had seen this about a week ago. My husband kept asking me if this was possible and my answer was “don’t ask me that again….no!” Darn! Of course our lender did not mention it.
b
You can always ask some else at your lender if they offer the option. I know not all lenders do it.
[...] portion for responsible homeowners to refinance was already in place. I can prove this because I got approved for a Fannie Mae streamline refinance in January before the plan was even announced and there was no appraisal at all on the refinance [...]
Great article!
[...] it in the family. I do see the house as a backup plan for possible high inflation because we are locked into a 4.875% fixed rate, and there is a possibility that we would move down there. So as stupid as it sounds, there is [...]
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