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FHA Net Tangible Benefit Calculator

Better than before road signEffective April 18, 2011, the Federal Housing Administration (FHA), revised the underwriting requirements (rules) for the FHA streamline loan program. The most notable change is the “net tangible benefit”.

New streamline loans originated after April 18, 2011 must demonstrate a 5 percent reduction to the principal and interest of the mortgage payment plus the annual mortgage insurance premium (MIP), or if refinancing from an Adjustable Rate Mortgage (ARM) to a fixed rate mortgage must either reduce the interest rate by at least 2% or be no greater than the current interest rate.

The FHA Benefit Calculator will estimate whether the new streamline loan will meet the net tangible benefit test. Mortgagee Letter.pdf. Please send me an E-mail if you see an error or want to make a comment or a purchase. Last updated 9/2018.

Net Tangible Calculator | UFMIP and MIP |

Loan Number
Case Number
Borrower Name
 
PASS or FAIL    
 
CURRENT AMORITIZATON TYPE  
PROPOSED AMORITIZATON TYPE
 
  CURRENT   PROPOSED
Amortization Term (Years)    
 
  CURRENT   PROPOSED
Enter 1st mortgage P & I payment    
Enter monthly mortgage insurance payment
 
T O T A L    
Difference  
 
  CURRENT   PROPOSED
Interest Rate  
MIP Rate (ie - .85)
Combined Rate
Combined Rate Difference:  
 
BENEFIT TESTS   RESULTS   CRITERIA
Any ARM with <15 Mos to Pmt Change to Fixed Rate New Combined Rate no more than 2% above the prior Combined Rate.
Any ARM with >=15 Mos to Pmt Change to Fixed Rate
Fixed Rate to Fixed Rate     New Combined Rate at least .5% below the prior Combined Rate.
Fixed Rate to 1 Yr ARM     New Combined Rate at least 2% below the prior Combined Rate.
Any ARM with >=15 Mos to Pmt Change to 1 Yr ARM
Fixed Rate to Hybrid (Fixed) ARM
Any ARM with <15 Mos to Pmt Change to 1 Yr ARM     New Combined Rate at least 1% below the prior Combined Rate.
Any ARM with <15 Mos to Pmt Change to Hybrid (Fixed) ARM
Any ARM with >=15 Mos to Pmt Change to Hybrid (Fixed) ARM
Reduction in Term     The mortgage term is reduced;
The new interest rate does not exceed the current interest rate;

AND

The combined principal, interest and MIP payment of the new Mortgage does not exceed the combined principal, interest and MIP of the refinanced Mortgage by more than $50

 

Explanation of the net tangible benefit for a streamline refinance

The lender must determine that there is a net tangible benefit to the borrower as a result of the streamline refinance transaction, with or without an appraisal. Net tangible benefit is defined as:
-- a 5% reduction to the principal and interest (P&I) of the mortgage payment plus the annual mortgage insurance premium (MIP), or
-- refinancing from an Adjustable Rate Mortgage (ARM) to a fixed rate mortgage.

Notes: A reduction in the term of the mortgage is not a net tangible benefit.
When refinancing to a hybrid ARM, lenders must treat the new hybrid ARM as a fixed rate mortgage.

To qualify as a net tangible benefit, the new mortgage payment (P&I plus MIP) must be at least 5% lower than the mortgage payment of the loan being refinanced. Note : This requirement applies when refinancing from
-- fixed rate to fixed rate
-- ARM to ARM
-- Graduated Payment Mortgage (GPM) to ARM
-- GPM to fixed rate 203(k) to 203(b), and
-- 235 to 203(b). 
SOURCE: FHA underwriting manual HUD 4155.1