Take a conventional mortgage, have FHA insure it, and you have an FHA-insured mortgage, or an FHA mortgage, as a lot of people call them.  The main difference between FHA-insured and conventional mortgages is not in the type of mortgage you can get but in how you qualify for one.  And, of course, for the insurance premium you pay.  FHA Streamline Refinance is the same.  But, in this case, getting the new mortgage, the process, is way different.

In the past 3 years or so, the FHA Streamline Refinance Program had lots of changes done to it.  But now it’s back to how it started (see HUD mortgage statement from February 14 2011).  If the refinance gets you 5% reduction in your monthly payments (principal, interest and mortgage insurance premium) or you’re getting from an ARM (Adjustable Rate Mortgage) into a fixed rate mortgage, and the mortgage loan to be refinanced is an FHA-insured loan, you can now get an FHA Streamline Refinance.

And the FHA Streamline Refinance Program means, no income verification, no job verification, no credit verification.  They don’t want an appraisal, either.

To qualify, you need to have made your monthly mortgage payments on time for the previous 12 months.  But that’s all FHA cares about.  No, they’re not doing it out of the goodness of their heart.

Remember, you can get an FHA Streamline Refi only if on mortgages that are FHA-insured.  In other words, FHA is looking out for FHA.  They are insuring your mortgage right now.  If they allow you to do an FHA Streamline Refinance, they’ll still be insuring your loan.  Except, the chances of you not making your monthly payments are smaller.

Because your monthly payments are 5% lower or because your rate is no longer able to shoot through the roof as you no longer have an ARM mortgage loan.

To apply for your FHA Streamline Refinance or to find out more about it, you may contact us today at 847.729.4422.  You may now also contact us by email here.

When I started doing mortgages, I lived in Chicago, in Rogers Park and dreamed of being able to afford to live in the Lakeview neighborhood.  Back then, there was only one Lakeview.

And that’s what got me started writing today.  Back then, there were only 71 or 72 Chicago neighborhoods on the Chicago neighborhood maps.  Today, there’s more than 2 times as many. Do you think in 10 years there’ll be more then 2 times as many as there are today? How more fragmented can we get?

Anyway, here’s the new list (it’s just a list – I think it’s complete but maybe I missed a neighborhood or two):

Yesterday, someone asked me, What are some good questions to ask to choose the best mortgage.  I thought it was a great question.  I’ve been a mortgage broker in Chicago for over a decade.  Here are the questions I would ask if I were looking for a mortgage:

1. What’s the interest rate?

This one’s obvious, lower is better.  But to really get a good idea, you have to ask it together with the next one.

2. What’s the APR on this loan?

The lowest APR might not be the best, though. Some offers you get don’t include all the fees in the APR calculations.  So, you have to also ask:

3. What are the fees included in the APR?

Get it in writing.  Don’t ask if there are fees that are not included in the APR (Annual Percentage Rate, aka, the cost of the mortgage loan).  If they don’t put all of them in the APR, they might lie here too.  Compare APR fees line by line.

4. What are the closing costs, in dollars?

An APR based on all the fees would have them, but as mentioned above, not all APRs are complete.  Besides, it’s easier to compare dollars vs. dollars.  Again, get it in writing and signed.  On a ‘Good Faith Estimate’ because those are the standard.

5. Do I have to pay discount and origination points? How many? Technically, these should be questions 5 and 6 but they’re so closely related that I made them be #5 only.  Sue me.

When you talk about discount points, a point equals 1% of the loan amount.  You get a lower rate by paying discount points.  Usually paying 1% upfront (1 discount point) lowers your interest rate by 0.125%.

On a $1,000, 30-year loan at 7.5% buying down the rate by 1 point ($1,000) lowers your monthly payments by $8.53.  It takes 117 months (that’s 3 months short of 10 years) to get back your $1,000.

Origination fees are fees your mortgage broker charges for doing the loan.

6. This one’s like the previous, a twofer.  Does it cost me to lock the rate? When can I do it?

Interest rates change.  If you like the one you’re being offered, you should lock.  A lock is for a short period of time, usually long enough to get you the loan.  If rates go up, you still get the low one you locked.

7. Does this loan have a prepayment penalty?

Some loans have them.  Lenders give you a lower interest rate but want to make sure you stick around long enough for them to make the money they want.

Whether they’re for 1% of the loan amount or 6 month’s worth of interest, you need to know. And you need to know how long you must wait to refinance the loan or get rid of it (as in when you pay if all off because you won the lotto or sold the home).

8. How much must the down payment be?

The interest and terms of your loan are in relation of the down payment.  The higher the down payment, the less risk you represent, the lower the interest rate, the better the terms.

8. What’s required to qualify for this loan?

Different lenders have different rules.  Some are stricter than others.  You need to know all this upfront.

9. What are all the documents I will have to provide?

Depending on loan type and lender, the documentation required is different.  Providing all the documents required speeds up things, ensures that your lock doesn’t expire.

10. How long is it going to take do get the mortgage loan?

The answers vary depending on what’s happening in the industry, in the country, on the lender itself.  You need to have a good idea so you can know for how long to lock in your loan.

11. What can delay the approval process?

If you provide accurate and complete information from the start, there shouldn’t be problems.  However, occasionally, there are things outside your control that can slow down the process.  Such as, credit problems.  (That’s why it’s best you get copies of your credit reports before you apply for a loan.  To make sure the information there is accurate. The underwriter can still have problems.  But having accurate credit reports reduces the possibilities of that happening.)

If things in your financial situation change, let your broker/lender know (you got a promotion, lost your job, got married, or divorced, etc.).  To not do so could be fraud.  Or deprive you of the benefits of getting a lower rate.

The answers to these questions should help you choose the right Chicago mortgage broker, the one that’s got the best mortgage for you.  Or, for that matter, any mortgage broker or lender.

Do you agree that if you don’t look at the closing costs your mortgage broker provides you you can end up paying a lot more than you have to? Just so you don’t pay more than you have to, this article will provide you with 5 ways to minimize your closing costs.
If you look at them, do you get them on a Good Faith Estimate form, like you should (because there’s a law that says these have to be good estimates, that if they’re far below what you end up paying, your broker has to pay the difference?)

Do know how to minimize your closing costs?

Here are 4 ways to do that.

1. Examine your Good Faith Estimate and make sure you understand what each fee is for. Seems straightforward but many people do not do it. Sometimes, they do it long after the fact. You must do it before. Preferably a few days before, not minutes before. The closing costs are finalized on HUD-1, a form that you should have in your hands and inspect (compare it against the Good Faith Estimate form) several days before the closing.

2. Now that you understand what all the fees are for, make sure you don’t have there fees that you’ve already paid and are not given credit for that. Maybe you paid the appraisal fee upfront. It’s part of the closing cost, should be on the Good Faith Estimate as having been already paid.

3. Mortgage brokers (lenders too) have a number of third parties they work with, like title companies. That doesn’t mean you have to use those. For instance, if you have a title company that is reliable and willing to charge you less, work with that company.

4. ‘Lender’s Inspection Fee,’ ‘Commitment Fee’ and other such fees. Some exist only so that the mortgage broker or lender makes more money. Others exist so they don’t waste time with tire kickers. Make sure all such fees are absent or waived if there’s a closing.

Refinance closing costs are lower than the closing costs for a first mortgage. They still run into the thousands, you can still overpay by a few hundreds. Make sure you understand what you’re paying for in your closing costs and that the HUD1 form and the Good Faith Estimate form are in agreement.