Question: Write response on the given two posts, each response have minimum 100 words.
Andrew: This week I chose to write about an FHA streamline refinance. This option appealed to me, at face value, because I like things to be as simple as possible, so a streamlined refinance process sounds great. As the FHA states about this type of product, "The FHA Streamline Refinance program gets its name because it allows borrowers to refinance an existing FHA loan to a lower rate more quickly." This type of mortgage refinance often does not require an appraisal and has significantly less paperwork than other more traditional mortgage loan types. This refinance often does not require a full credit check either! The FHA reasons that since applicants have already been approved at FHA standards for their existing loans, they do not need further inspection. As if this wasn't already more convenient, the FHA will allow you to apply over the phone or online if you're lender will allow it. The FHA has established the following criteria for these types of streamlined refinance loans:
• You must have an existing FHA loan that is at least 6 months old
• You must not have missed payments on your current loan
• You must receive a benefit from the refinance
The other caveat to this type of loan is that you cannot use this option for a cash out refinance because the maximum cash received through a streamline refinance is $500. Although I have not experienced this first hand, to me, this is a great and simple option to lower monthly payments without a ridiculous amount of hassle.
Matthew: The Federal Housing Administration (FHA) product that I have chosen to discuss in this weeks forum is the section 203(K) Rehabilitation Mortgage Insurance. Using the 203(K) Rehab Mortgage a homeowner can make up to $35,000 worth of improvements, repairs or upgrades on their home. Theses improvements can be from something that a home inspector had identified or an approved FHA appraiser. This loan can be used to spruce up as the homeowner is moving in, or as the homeowner is preparing to sell their property. The minimum loan amount is $5,000 and can be used for all renovations done to the home. It is not required for the homeowner or buyer to live in the property at the time the property is being renovated, it is however required that the renovation be approved by the FHA and work done by a licensed contractor approved by the FHA. Throughout the course of the rehabilitation an FHA inspector will check on and approve the project, before the contractor can be paid for the work. The expense of the inspections is absorbed by the homeowner, multiple inspections are to be expected throughout the course of the project. The Rehab may be used on single family homes as well as multi unit housing.
The only other Rehab loan that I have heard about is through the VA, if a VA home loan is used to purchase a house in need of repairs then the borrower can borrow up to 25% cost of the house for repairs. To my understanding it is not meant for anything frivolous, it is more focused towards things that are essential or will help to conserve or meet energy efficiency.