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Good news for those with an FHA backed mortgage. Starting June 11, refinancing FHA mortgages through the government's streamline program will become more affordable and potentially easier for hundreds of thousands of homeowners.
"This is a special program that the President has rolled out and the government has rolled out. They're reducing the monthly mortgage insurance and the up front mortgage insurance. Which is great, because those costs have gone up significantly in the last couple of years," said Jim Cardinal, Syracuse Securities Loan Officer.
It is those other fees that proved to be an obstacle for people with FHA mortgages and made it difficult for them to take advantage of historically low interest rates. Cardinal cautions, however, that the new streamline refinance program is not for everyone.
"It's not for all applicants. It's actually for folks that have an FHA loan that was insured by FHA in June 2009 or before," said Cardinal. "There are certain times when it doesn't make sense to refinance. If you're thinking you're going to leave the house in a real short period of time like one to two years, you really need to look at the costs associated with it. Whether you're rolling in the closing costs or paying them out of pocket, you may not be in the house long enough to see the benefit of that refinance."
According to Cardinal, this announcement could not have come at a better time. Loan officers and real estate agents both thought the rock bottom interest rates would not last. It turns out they are lower than ever.
"When we saw this program coming out we were pretty excited about it. We tempered our excitement because we thought interest rates were going to go up. But that hasn't happened. Rates are actually even lower than before," Cardinal said. "We're really going to be able to help a lot of people reduce their debt and reduce their interest rates on their current mortgages."
If you are looking to take a vacation, remodel your kitchen, or save for retirement, it is a great time to consider refinancing.