Refinancing Your F.H.A. Mortgage at Lower Cost




Earlier this year, the Obama Administration came out with a program that would make refinancing less expensive for certain borrowers with mortgages backed by the Federal Housing Administration.

But if you want to take advantage of the program, you probably won’t be able to shop around for the best interest rate. In other words, you may have little choice but to refinance through the bank that now holds your mortgage.

Wells Fargo, Bank of America and JPMorgan Chase all said this week that they would refinance only their own customers through the F.H.A.’s reduced-cost program. Most of the banks, more or less, gave the same reason: they expect high customer demand and want to focus on existing customers whose loans they already service.

Citi, meanwhile, said it would require an appraisal to refinance F.H.A. loans that it does not service, even though the program typically does not require one. And US Bancorp said it was taking applications from new customers but was evaluating whether it would continue to do so (The bank is no longer taking refinancing applications from brokers on loans it doesn’t already service.)

After the housing market collapsed in 2007, more borrowers began to turn to the F.H.A.’s loan program because it has less stringent guidelines than conventional mortgages: people with credit scores of 580 or more can put down as little as 3.5 percent. (The agency doesn’t actually make the loans, but it insures them.)

So as part of its effort to help resuscitate the housing market, theWhite House cut the cost of refinancing through the F.H.A.’s “streamline” program — which is typically much easier than a traditional refinancing. The fees that the F.H.A. typically charges borrowers have risen in recent years. Brokers have said this prevented many people from taking advantage of low rates and refinancing. This program aims to solve that.



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