FHA Refinance Basics:
The purpose of the Federal Housing Administration is to increase refinance opportunities in MA with federally insured mortgage products. FHA does not make mortgages they insure them.
An existing FHA mortgage can be refinanced on:
- A primary residence in MA
- Second home in MA
- Investment property in MA
- 1-4 units
- Condos
The FHA insured mortgage gives MA residents more flexibility than conventional mortgages, but that flexibility does come with a cost. FHA mortgages have something called MIP (Mortgage Insurance Premium). This MIP is charged both upfront and monthly and will stay on loan until you have a loan to value of 78% and have paid on the MIP for 5 years. These MIP guidelines change frequently and are will be changing again on April 1st, 2013.
Something to always consider when utilizing a FHA insured loan in MA are the loan limits. Each county in MA has a different acceptable lending limit.
MA FHA Loan Limits by County
| County | 1 Unit | 2 Units | 3 Units | 4 Units |
| Barnstable | 462,500 | 592,050 | 715,700 | 889,450 |
| Berkshire | 271,050 | 347,000 | 419,425 | 521,250 |
| Bristol | 475,000 | 608,100 | 735,050 | 913,450 |
| Dukes | 729,750 | 934,200 | 1,129,250 | 1,403,400 |
| Essex | 523,750 | 670,500 | 810,450 | 1,007,200 |
| Franklin | 318,750 | 408,050 | 493,250 | 613,000 |
| Hampden | 318,750 | 408,050 | 493,250 | 613,000 |
| Hampshire | 318,750 | 408,050 | 493,250 | 613,000 |
| Middlesex | 523,750 | 670,500 | 810,450 | 1,007,200 |
| Nantucket | 729,750 | 934,200 | 1,129,250 | 1,403,400 |
| Norfolk | 523,750 | 670,500 | 810,450 | 1,007,200 |
| Plymouth | 523,750 | 670,500 | 810,450 | 1,007,200 |
| Suffolk | 523,750 | 670,500 | 810,450 | 1,007,200 |
| Worcester | 385,000 | 492,850 | 595,750 | 740,400 |
A homeowner in MA utilizing a FHA mortgage refinance will have the following benefits
- More flexible debt to income ratio guidelines
- Up to 96.5% refinance for rate/term refinances (non cash out or debt consolidation)
- 85% loan to value allowed for cash out and debt consolidation
- Lower interest rates than conventional loans
FHA Streamline:
The FHA Streamline refinance program has been around since the early 1980s but has increased in popularity in the last 4 years with the depreciation of home values and the explosion of FHA insured mortgages.
On Monday June 11th, FHA implemented some relief to their rising Mortgage Insurance Premium (MIP) costs. Although this doesn’t help everyone it is a step in the right direction and will have millions get the full realization of record low borrowing costs.
The FHA MIP change is effective for FHA case numbers ordered on or after June 11th. The home owner must have closed on their last FHA transaction whether that was a purchase or a refinance prior to June 1st 2009, and that loan must also have been endorsed by FHA by that time.
The Benefits of the FHA Streamline
- No appraisal required- FHA will utilize the appraisal that is already in the system from your last transaction
- Less paperwork- Less income verification documents required
- Faster underwriting time-lines (usually about 3 weeks)
- No income verification for qualified borrowers- Employment verification only
Hopefully there will be more changes like this in the future to help clients that don’t fall into those above referenced refinance dates.
For those who have a FHA loan endorsed after May 31st 2009, you will still be able to refinance into low interest rate and will get a portion of your up-front MIP refunded based on the length of time you have had your mortgage.
The following chart is the MIP refund chart to help you understand your refund amount. This is taken off of your new up-front MIP.
