On this Sunday’s show, I talked about how streamline refinancings might be possible. Different lenders are considering this option, which basically allows you to lower the interest rate on your loan without doing a full refinance (or paying the costs associated with a full refinance).

The last time I did a streamline refinance, it cost me a few hundred dollars (I can’t remember, but I think it was somewhere around $300 to $500).

But doing a streamline refinance when you have good credit and are not in danger of going delinquent on your mortgage or being foreclosed upon, is different from a streamline modification, which the folks at Wells Fargo are now starting to implement as an option for those who are in danger of losing their homes.

Fannie Mae, Freddie Mac (and FHFA, which is now regulating the two secondary mortgage market giants) and other lenders are working together to develop streamline modifications for at-risk homeowners. Options here include lengthing loan terms from 30 to 40 years to lower payments, forebear principal to 100 percent of current market value, and dropping the interest rate to 3 percent. The goal of these streamline modifications is to get debt-to-income ratios to 38 percent of gross monthly income (GMI).

I’m going to do a survey of some of the bigger lenders this week (I hope it will be this week) to find out what they’re doing with regard to streamline refinancing (just lowering the rate, but keeping the terms of the loan the same to avoid getting their best borrowers cherry-picked in an era of declining rates). As soon as I know more, I will update everyone on costs, terminology, and timelines.

Thanks for checking in.

Published: Jan 13, 2009