Archive for September, 2009
Mortgage Refinance Rates
Posted by: | CommentsMortgage rates remain low and the housing crisis has caused home prices to drop to a more affordable level. The Fed cannot continue to lower interest rates and most experts agree that as soon as we say real signs of the economy turning, the Fed will start raising key interest rates.
What does the Fed raising rates mean to the average American borrower? It means that mortgage lenders and banks will begin to hike the mortgage rates.
Right now a 5% 30-year year fixed rate mortgage is a reality with FHA home loans, conventional and VA mortgages. When the Fed starts jacking the rates, mortgage refinancing rates will rise as the cost of borrowing could sky-rocket.
Refinance while the rates are low. If there are opportunities now for you to save money, get off your but and refinance your mortgage. If you are considering buying a home, discuss your eligibility with a loan officer and find a house to make an offer on. Now is the time to maximize home financing with affordable mortgage rates that will save you money.
When FHA Streamline Makes Sense for Mortgage Refinancing
Posted by: | CommentsOne of the more frequently asked questions I get revolves around the timing for mortgage refinancing with FHA streamline loans. Borrowers want to know when to time streamline refinancing. The first question I ask them is, “Do you currently have a FHA mortgage.” If they say no, then I remind them that FHA streamlines are for homeowners who already have a FHA home loan. If they say yes, then I ask them, “Are you seeking cash back in the refinance loan?” If they say yes, then I remind them that streamline loans are only for rate and term refinancing, meaning, no cash out is allowed.”
The best time to streamline refinance your FHA mortgage is when you are saving a significant amount of money each month without adding on additional years with the new loan terms. As far a percentage goes, (ie if you can reduce your rate by 1%) I tend to stay away from that type of a rule, because it depends on what type of mortgage you have (ie. Fixed or adjustable rate) and how big your loan amount is. For example, a borrower reducing their rate half a percentage point on a $500,000 mortgage will actually save more money a month than a borrower who reduces their rate by 2 percentage points on a $100,000 loan because the loan amount is so much greater. FHA streamline refinance loans were developed in an effort to automate the refinance process for good FHA customers and reward them with a reduced cost FHA mortgage at a very low interest rate.
Mortgage Loan-Modification Plan Revised for Home Equity Loan Relief
Posted by: | CommentsMany mortgage servicing companies have refused to modify second mortgages and many homeowners have defaulted on their home equity line of credit because their variable rate payments rose beyond their affordability. In a recent article Ruth Simon considers the implications for a new loan modification designed for second mortgage loans. The Obama administration announced new home loan guidelines for its foreclosure-prevention program aimed at offering mortgage relief for borrowers who have a high interest rate equity loan that they have been unable to refinance because of lack of equity or late payments since their second mortgage rate rose after becoming adjustable. Thousands of homeowners tried to qualify for mortgage refinancing that would roll their 1st and 2nd mortgages together into one affordable home loan payment.
The new mortgage loan modification program looked to address a critical component in its efforts to stem the foreclosure crisis. According to Credit Suisse Group nearly 50% of delinquent borrowers have a home equity loan. Many mortgage executives complained to the administration a few months ago because their $75 billion mortgage bailout program had no plans to re-work equity loans in 2nd position. Investors, who include pension funds, insurance companies and hedge funds, say that rewriting the first mortgage without touching the second violates their rights, because second mortgages are supposed to be repaid second. Critics also pointed out that Obama’s first plan had a conflict of interest, because many mortgage loans are serviced by big banks that also hold home equity loans.
Under the revised home equity loan relief plan, mortgage-servicing companies that participate in the loan modification program for second mortgage liens must automatically renegotiate the2nd mortgage when the 1st mortgage was reworked. The US government will share in the cost of reducing the interest rate on second mortgages for five years. As an alternative, it will pay holders of home equity loans to relieve their unpaid debt.
Mortgage-servicing companies that modify second mortgages will receive an upfront payment of $500 and additional payments of $250 a year for up to three years for successful modifications of home-equity loans and other second mortgages. Homeowners who do not fall delinquent on the modified equity loan would receive payments of $250 a year for up to five years that would be used to pay down the balance of their first mortgage. The revised plan also encourages the use of the federal Hope for Homeowners program, which allows borrowers to refinance into a more affordable, government-backed loan, provided the investor who holds the mortgage agrees to a principal write-down.