Options For Upside Down Homeowners

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

Shaun Donovan, Housing Secretary, To Underwater Americans: There's Help For You

[mdurette Senior Member Find all posts View Profile Close mdurette]

For homeowners that have FHA mortgages now, this is a huge win. FHA offers a streamline refinance with no appraisal (so no worry about equity). But, the cost of their annual fee (the part that is paid monthly - called MIP) is so high right now that it eats up any savings in interest rate. This reduction in the fee is going to make it worth while for homeowners with FHA loans now to refinance. Going rate right now for this is 3.75% with 0 points. Big score for them!


NEW YORK (CNNMoney) -- Borrowers with some federally insured mortgages will be able to refinance into lower interest rate loans more easily and cheaply under a plan unveiled Tuesday by the Obama administration.

At a news conference, President Obama announced that the Federal Housing Administration will cut upfront fees for refinanced loans it already insures.

The new fees are for borrowers whose FHA loans were issued before June 1, 2009. An estimated 2 to 3 million borrowers could take advantage of the savings, which could reduce mortgage payments for the typical FHA borrower by about a thousand dollars a year, according to the administration.

"It's like another tax cut in people's pockets," said President Obama.

Borrowers who refinance their existing FHA loans will pay an upfront insurance premium equal to 0.1%, the lowest allowable rate, of the mortgage amount -- $100 for a $100,000 loan -- plus an annual fee of 0.55%.

The new refinancing fees contrast sharply with the cost of obtaining a FHA loan, according to Jaret Seiberg, an analyst with the Washington Research Group. A borrower making a 3.5% down payment on a home purchase as of April 1 will pay a 1.75% upfront fee and a 1.25% annual fee. Those purchase fees were raised barely a week ago to improve the FHA's capital reserve.

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

From what I've read, 2/3 of Florida mortgages do not qualify.