FHA Streamline Refinance- Reaffirm or considered new loan?

[sobeit]

Hi everyone,

Haven't been around here for awhile. January is the 2 year anniversary of my Chapter 7 discharge. Yay! My mortgage was "discharged" in my bk, and my state (Oregon) didn't require reaffirmation, I have just been paying.

My current loan is a FHA loan at 5.875%. I have done some research about FHA Streamline refinance, for which I am eligible 2 years post discharge, and does not require an appraisal or credit check. Sounds like I'm pretty much guaranteed as long as my mortgage payment history is spotless, which it is, and I haven't acquired any significant new debt, which I haven't. In fact I am still unsecured debt free.

Something I don't quite understand is how this will work as far as how the loan is considered and reported. Will I need to reaffirm the loan or will it be considered a new loan? It will start to report to the credit bureaus after this, correct?

I've had a hard time restablishing my credit since I have so little reported (I got a $500 unsecured credit card post bk, that's it) so I'm hoping this will help me in that area. Though it's not so bad- last I checked my FICO is 686. It was lower than that before the bk.

Thanks for any help you can give me?

[LadyInTheRed]

You can't reafirm a loan after discharge. If you refinance, that means a whole new loan to pay off the one that was discharged. You will again be personally liable, unless your state law prohibits deficiency judgements on a refinance loan on your residence. If your only reason to refi is to have it reported on your credit reports, I wouldn't do it. But, it may be worth being back on the hook if the rate gets lowered to something closer to the current rates.

[tobee43]

ditto lady, and also it your intention is to keep the house forever, then it may certainly be something you would like to consider.

[sobeit]

Thanks all. My house is very small, simple, and relatively cheap. I would be hard pressed to find a rental cheaper than my mortgage payment. I see it as a place I'll probably live in forever unless a major life event happens, for better or worse. About a year after my bk I got a better, higher paying job, so things are very stable right now. Of course, we can never know what the future holds.

Refinancing would primarily be to get a lower interest rate, but I do like that it would then report on my credit. I would like to be able to finance some home improvements in the future.

[sobeit]

Also, while I probably have only about 10% or so in equity on my mortgage, I'm not under water. But I'd be interested to know if, considering my circumstances, there are reasons why the refinance would not be a good idea.

[tobee43]

well, once again, if you are planning or staying forever or at least in your future it would be something, of course to consider if you can get the interest rate down.

now, that being said, i don't know exactly how difficult the process will be even being out our BK for 2 years. it's worth a shot to lower you monthly expenses. in as much as reasons why not to, the refin is going to cost, i would check into the closing costs and what to expect as far out of pocket monies. i do believe the days may be numbered as far as taking cash out, but i'm not quite clear and really i don't know if anyone is, as to how the banks will behave with your situation.

best of luck and keep posting and keep us up to date

[sobeit]

My understanding is that the FHA Streamline Refinance does not have any out of pocket costs and minimal closing costs rolled into the mortgage. You can't take money out, either. It's some special government program to allow people with FHA loans to get a lower interest rate without having to do the normal high cost/appraisal/credit and employment check route.

[tobee43]

My understanding is that the FHA Streamline Refinance does not have any out of pocket costs and minimal closing costs rolled into the mortgage. You can't take money out, either. It's some special government program to allow people with FHA loans to get a lower interest rate without having to do the normal high cost/appraisal/credit and employment check route.

i hope it's that easy

[sobeit]

Well, of course my research now shows that it isn't that easy. At least not quite.

You can either pay closing costs OR have them rolled into your new loan, but that may require an appraisal. Which of course aren't free. I may just have to wait until January to see what the bank says.

Here is info about the program for anyone who may be interested: http://www.examiner.com/article/refi...or-loan-amount