August 26, 2014
A reader asks, “I currently have an FHA loan that I have had for 5 years and would like to streamline,but the maximum loan amount has changed since I got the loan and the new limit is less than what I owe. Does the new limit apply to streamline loans as well as new loans?”
The FHA and HUD issued some guidance back in 2013 to clarify the rules for maximum loan amounts for FHA Streamline Refinancing. According to Mortgagee Letter 2013-29, the following clarification affects how the maximum amount is calculated, and what can be included in the loan amount when calculating that maximum.
“Mortgagees are reminded that when processing an FHA-insured streamline refinance mortgage, the new maximum mortgage amount must always be calculated starting with the outstanding principal balance on the existing mortgage, not with the payoff amount for the existing mortgage.”
FHA also added, “Mortgagees are permitted to include up to two months of Annual MIP payments in the mortgage amount for all FHA-insured streamline refinance transactions, including streamline refinances without an appraisal.”
When considering your FHA loan options, it’s critical to understand the difference between the payoff amount of your new purchase home loan and the outstanding principal balance. We wrote about this subject back in 2013 in a blog post titled, “FHA Loan Rules Updated: Maximum Loan Amounts For Streamline Refinancing” which includes the following:
“Borrowers should know the difference between the outstanding balance and the payoff amount. According to the Consumer Financial Protection Bureau (CFPB) official site, ‘Your payoff amount is how much you will actually have to pay to satisfy the terms of your mortgage loan and pay off your debt.'”
Our 2013 blog post also included the following reminder from the CFPB, “Your payoff amount is different from your current balance, which is the amount you owe as of the date of your statement. Your payoff amount also includes the payment of any interest you owe through the day you intend to pay off your loan, and it may include other fees you have incurred and not paid.”
For more information on your specific payoff balance or outstanding mortgage loan amount, contact your loan officer.
Do you have questions on FHA loans or FHA refinance loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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