2009 FHA loan Refinance from bofa

i have a fha loan of 400k@5.00% from bofa (september 2009). current on all payments. home value has dropped 10-15%. Can i get a FHA refinance? What are my options?

2 Answers

A new underwater FHA loan directive states that this type of loan is FHA to FHA refinaceable with no caps on loan to value, consult your lender for details.

You could certainly do a streamline FHA refinance with no appraisal and value of your home wouldn't be an issue. You can't include (roll in) closing costs with this technique, but lenders can and do pay many/all costs on these loans. The bigger (and likely deal killing) issue is that FHA raised the upfront and monthly mortgage insurance premiums since you did your last loan, and even if you dropped the rate by 1.25%, you wouldn't save enough to meet FHA's "net benefit" requirements. Doubtful that a lender would pay too many costs at 3.75%, so you'd be on the hook for them, and the benefit would be minimal. There is a new program in the works allowing FHA borrowers with loans insured PRIOR TO 6/1/2009 to lower their rates with no appraisals and without any additional mortgage insurance costs. Great program for those who qualify, but it won't help you now. Hopefully FHA will expand the origination dates in the future, and then you'd be a great candidate to improve your loan.