Last week, the public received some good news from the Obama Administration. Beginning June 2012, FHA will reduce up-front insurance premiums to 0.01 percent of the total loan amount from 1 percent and annual fees will be cut to 0.55 percent from 1.15 percent for borrowers with FHA loans obtained before June 1, 2009.

The reduction is part of Obama's effort to help homeowners take advantage of our current low interest rates which could increase the reach of FHA's streamlined refinance program for millions of homeowners paying interest rates higher than 5 percent. A borrower who had a FHA loan prior to June 1, 2009 would save thousands of dollars annually from lower premiums and interest rates. Sounds good, right? Well, let me advise you on the importance of wording.

A married couple came into my office last week for a Streamline refinance. Fortunately, I was able to reduce their loan by 5%. Everything was moving forward smoothly. I ordered a new FHA case number, emailed them a good faith estimate, and scheduled an appointment for them to sign disclosures until I got a phone call from the wife. She said, "Hi Jim, I just heard about Obama's refinance program on the news. Our FHA loan closed on May 29, 2009. Don't we qualify for that reduction?"

Since I believe in honesty, I responded, "Yes, it seems that you fall in that category." "So, we should wait, right?" she replied. I said, "Of course. It would be to your advantage to wait until June when this plan goes in effect so you can take advantage of an even greater savings on your mortgage. We'll put it on hold then and revisit the refi in June. Hopefully, the rates will still be low so let's keep in touch."

After I got off the phone with her, I re-read the press release on the FHA website announcing the program. It said that in order to qualify, borrowers must be current on their existing FHA-insured mortgages which were endorsed on or before May 31, 2009. The key word that stood out to me was "endorsed" so I looked up my clients' endorsement date. It was June 25, 2009--almost a month later from the date they closed on May 29th. Unfortunately, they wouldn't have been eligible for the reduction.

I quickly called the wife back and told her what I discovered. I emailed her the guidelines from the FHA website and a copy of the actual endorsement date. Needless to say, they came into my office the next day to proceed with the refinance and sign the final disclosures.

This example is why it's important to read and understand words carefully. An "endorsement" isn't the same as a loan closing so before we make assumptions, we must check facts first. Had this couple waited until June, they wouldn't have been eligible, not to mention, interest rates might've been higher which it looks like they will according to industry forecasts.