Archive for Bryan Dornan Articles
5 Key Factors for Mortgage Refinancing in 2012
Posted by: | CommentsAs millions of homeowners contemplate refinancing their mortgage, it is important to consider potential factors for home refinance loans going forward in 2012. Refinance loans have helped assist homeowners with affordable housing solutions by extending opportunities for increased cash flows and offering cash out options.
1. When will the Federal Reserve begin raising key interest rates? Economists all seem to agree that it is just a matter of time before the Fed starts hiking rates to curb inflation. Consumers in the U.S. have grown accustomed to record low rates. Millions of homeowners will be astonished when refinance rates climb to 5% and 6% on the 30-year terms. Presently, qualified borrowers can get a thirty-year mortgage refinance at 4.5% with no closing costs. When the Fed begins raising rates it will have a negative impact on affordability and likely the housing recovery because consumers will be less motivated to invest in higher cost housing.
2. Will FHA continue to raise insurance premiums for FHA home loans? Every time HUD increases the insurance premium it has a profound impact on the monthly payment for borrowers refinancing or purchasing a new home. This could have a negative impact on homeowners who do not have equity, because FHA is the most aggressive loan programs for non-military borrowers seeking mortgage refinancing assistance.
3. Do lenders continue to tighten refinance guidelines in 2012? If we examine the trend over the last 5 years it would be hard to argue against tighter loan guidelines for mortgage refinancing in 2012. Each of the last five years we have seen underwriting guidelines get more restrictive for government and traditional refinance mortgages.
4. Will private money reappear and replenish the mortgage industry in 2012? Rumors have been swirling the home financing sector this year that private money investors are poised to return as a viable option for mortgage lenders. Loan companies have relied heavily on government loan programs like FHA and VA for mortgage refinancing programs. The fact that private lenders like Cash Call have reintroduced 125% loans recently is a good sign that investors should be reviving the private money portals soon.
5. When will the housing crisis end? It’s no secret that he housing sector has been battered over the last six years. Nearly a quarter of the country is strapped with an underwater mortgage. That rivals the housing woes of the Great Depression. If foreclosures and short sales continue to drive the house market then it is unlikely we will see any rebound in the housing sector in 2012. Realtors and politicians can dress it up however they want, but with millions of homeowners behind on their mortgage, growing fears of a double dip global recession and tight lending guidelines, the housing sector will get worse before it gets better.
The State of the Home Mortgage Market
Posted by: | CommentsAfter the President gave the State of the Union Address last night, I thought it was only fitting to deliver the “state of the home mortgage market” address. There are a lot of changes looming in the home loan industry in the next few months which is making borrowers reconsider their financial moves. Home mortgage rates are beginning to see an upward trend and many homeowners are kicking themselves for not moving forward with a refinance loan in November or December when rate had fallen to 50-year lows.
In April there will be significant changes as the Dodd-Frank mortgage reform bill will finally go into motion. There are many short-sided issues in this bill designed to protect consumers, but in the end most industry insiders believe that it will increase the cost for home loans and mortgage rate refinancing. In is inevitable that we will see a consolidation in the home financing market as many smaller brokers will close their shops, because they can’t compete with the new rules.
The mortgage reform bill will change the way brokers and loan officers are paid and many lending companies have already started down-sizing their loan originators. In the end it is likely there will be less loan officers which mean that borrowers will get what the banks are offering. With a competitive mortgage market, consumers benefit with more choices, diverse lending niches and competitive pricing.
Hopefully the Federal Reserve and the U.S. government will wake up and realize that a competitive mortgage market is good for the consumer and good for the economy. The VA mortgage loan is still a great financing vehicle, but not many borrowers qualify. FHA home loans remain somewhat aggressive, but even HUD is requiring more equity, better credit scores and the insurance premiums continue to rise.
Home values will need to rebound and home loan guidelines need to loosen up so that the average borrower who can afford a home can qualify for a home loan. Right now it seems like only the “best of the best” qualify for new home financing or mortgage refinancing. We need more private money back in the marketplace, but the foreclosure crisis needs to be solved before most of the non-government mortgage lenders will jump back into the game. Until then — Make the most with what you have and remember that the United States of America is still the best country in the world.
Timing the Lowest Mortgage Rates
Posted by: | CommentsAmerican consumers are notorious for wanting the best deal, so when borrowers tell you they are waiting to get the lowest mortgage rates we should not be surprised. With 30 year fixed rates falling below 4% last month, we may have found the bottom of the mortgage rate graph. Since then, home loan rates have teetered back and forth, but all signals point towards a trend of rising rates in 2011 and beyond. Of course if the economy continues to sputter you could expect low mortgage rates, but it is doubtful we will see the 30 year fixed rate mortgage below 4% anytime soon. The fact remains that the lowest mortgage rates in 2010 can be attributed to the Federal Reserve and the U.S. Treasury buying the bad credit mortgage portfolios from banks and lenders even as the default rates were rising.
Will Mortgage Rates Get Lower?
A few mortgage lenders are offering the fixed 10 year mortgage in the 3.5% range, but how many Americans have the ability to afford the higher payment that comes with a ten year amortization schedule? The 15-year fixed mortgage is a bit more realistic and great choice for those borrowers that can see retirement in the near future. Still with the writing on the wall, why are do so many Americans continue to wait for mortgage rates to get lower?
According to BofA’s, Jeff Moran, “A lot of people have been rejected from loan refinancing or home buying in the last few years, so many of these people may be a little tentative about facing the scrutiny of a mortgage lender. Moran continued, “Many consumers were taken back by the tighter guidelines for home loans and many applicants simply do not meet the new requirements for refinance or home purchase loans.”
The bottom line is that waiting for rates to fall again is very risky. When you look at a thirty year graph highlighting the trends of mortgage rates you can see that it is far more likely that rates will rise than they will fall. Borrowers waiting on the sidelines for lower rates for home financing could be waiting for decades. Still many consumers appear to be just fine sitting on the sidelines, waiting for lower mortgage rates to appear. Nobody knows for sure, but if you have the ability, I suggest locking into a mortgage that you are comfortable sooner rather than later.
Refinance or Second Mortgage?
Posted by: | Comments
One of the most common questions I get from consumer looking for cash is whether they need a refinance loan or to take out a second mortgage. Every situation is different, so there is not a simple “canned answer” when it comes to cash refinancing. In order to offer educated advice on a first or second mortgage I need to understand the big picture. In an effort to responsibly address this financing scenario, I need answers to the following questions below:
What’s your loan to value (LTV)? We need to determine how much equity you have because you may not be eligible for a credit line or second mortgage.
How is your credit? Whether your fico score is 580, 680 or 780 this will enable me to understand further what cash out options are available to you. Cash out refinancing guidelines range from 75 to 90% loan to value depending upon what type of borrower you are. It also matters how big the mortgage loan is that you plan to take out. Some lenders will allow good credit borrowers to go to 90% LTV on a credit line or fixed home equity loan if it is only for $35,000.
Do you have pre-payment penalty on your first mortgage? Sometimes borrowers will have pre-payment penalties that equate to thousands of dollars. When a homeowner has a large pre-pay on their existing mortgage, it can make a second mortgage option more attractive.
What are you doing with money? It is important to know why you are considering a cash out refinance. For example if you are consolidating debt then we would always recommend a fixed rate loan that featured simple interest. Whereas, if you are remodeling your home and you are not sure how much cash you will be borrowing or when you will need the money, then a home equity line of credit may be the perfect solution.
Do you have a second mortgage or equity loan already? If you already have a 2nd mortgage, we will have to refinance it and roll the balance into the new loan.
Interest rates remain at record lows and the guidelines for cash out financing appear to be expanding a bit in 2011, but it is important that you discuss you goals and situation with an experieinced loan officer so you can make the best financial decision.
3 Benefits of Home Loan Financing
Posted by: | CommentsIn the midst of the housing crisis many pundits have questioned the benefits of homeownership. We decided to highlight a few of the many benefits of financing a home and becoming a homeowner. Getting approved for home loan financing can be challenging but it is clearly worth the effort. Get qualified for mortgage loans does not happen overnight, as borrowers must take the initiative to establish credit and demonstrate to mortgage lenders that you have the ability make your loan payment on time each month.
Once you have ability to get approved for home loan financing here are a few of the significant benefits below:
1. Earn Home Equity with only a small down-payment required. Imagine if you only had to invest 3.5% of the cost of a stock to own it. Well when financing a home you become a owner with equity rights with only a small down-payment. Millions of Americans have earned their retirement through financing a home and reaping the benefits of home appreciation over time.
2. Tax Deductibility - Homeowners have the ability to write-off the interest of the mortgage payments each month. In most cases, this saves homeowners thousands of dollars each year. Renting does not offer the tax advantages that owning a home enables.
3. Ability to Access Money - Get approved for a cash out loan is much easier if you have collateral. Cash refinancing, equity loans and home equity credit lines create a unique opportunity for homeowners to get quick access to cash.
Loan article was written by Bryan Dornan.
Recommended Nationwide Articles to Help Consumers Purchase Homes Cost Effectively:
No Down-Payment Loans with VA | Home Purchase Loan | Tips for First Time Home Buyer Loans |
Mortgage Tips to Maximize Home Refinancing and Savings
Posted by: | CommentsSomeone asked me the other day if there was an art to getting the best home loan rates when refinancing. I don’t know if I would call it an art, but maximizing the opportunity to get the lowest rates while paying the least amount of closing costs is definitely a wise financial move. Home mortgage refinancing usually looks great on paper, but if you make a few poor decisions during the process it can become very costly
Find the best mortgage lender. You should work with a reputable loan company that enables you to work with an experienced and accessible loan officer. Home loan programs can change while you are in the process of refinancing, so you need someone who is going to keep you in the loop. You need to work with a loan officer who will level with you about locking or floating the interest rate. If the refinance rates just dropped and you are happy with the interest rate published on your disclosures then it probably makes sense to lock the rate. In most cases it will only cost you .25 of the loan for a 45-day lock and usually you can roll the cost into the loan. I can’t over-emphasize the value of working with the best mortgage lender.
Compare the rate of a No Cost Loan to the Lowest Rate Mortgage Paying Fees. Often times there is not much of a difference in the rate (i.e .125% ). Chances are that you will move or do another mortgage refinance transaction in the next 5 to 7 years, so you must ask yourself this question —- Is the option for a .125 lower rate worth paying an extra $2,000 to $3,000 in closing costs? In most cases it is not, because the $15 to $20 you save per month only equates to a $1,000 after 5 years.
Compare Conforming and FHA Loan Programs – It is very important when you that you compare the total cost of monthly mortgage payments before deciding which type of refinance loan to go with. For example the home mortgage rate on a FHA refinance is likely the same as a conforming rate. However with FHA mortgages, there is insurance that is paid when you close the loan and then a monthly insurance premium you will also be paying. So in many cases FHA borrowers are paying an extra $100 to $200 for mortgage insurance. Whereas with a conventional mortgage if you are under 80% Loan to value (LTV) you will not be required to have mortgage insurance. So verify with your loan officer what your loan to value is and then compare the loans that you are eligible for. Article was written by Bryan Dornan.
5 Home Refinancing Tips for 2011
Posted by: | CommentsThe home refinancing market has been on a roller coaster the last few years, but 2011 could shape up and more borrowers could qualify to refinance than did in the last few years. I get a lot of emails from homeowners asking me for home refinancing tips so I wanted to make some suggestions.
1. Take advantage of VA refinancing if you qualify for the VA loan programs. Veterans continue to have a significant advantage when it comes to home buying and mortgage refinancing. The VA refinance loans are more aggressive than conventional and FHA lending so take advantage of this great resource.
2. Streamline Refinance if you have a government loan. If you are having difficulty getting approved for a refinance loan because of income documentation because you your debt to income ratio is too high and you presently have a government mortgage like a VA or FHA , then consider the streamline refinance. Both the VA and FHA loan programs offer the streamline refinance loan that does not require pay stubs or W2′s for salaried and hourly employees. You still have a job, because the lender will verify with your employer that you still have a job. Government insured home refinancing continues to dominate the finance market in 2011.
3. 5/1 ARM offers low rates that maximize affordability. If you are having trouble fitting your mortgage payment into your budget and you want to keep your house, consider the 5/1 because you get a 3% rate fixed for 5 years. This gives you another five years to increase your income before you lock into a 15 or 30-year fixed rate mortgage. For example a $300,000 mortgage payment would be in the $1,000 a month range with the 5/1 ARM at 3%.
4. Don’t rule out a mortgage loan modification. If you have been late on your home loan payments or you have been unable to get approved for a bad credit mortgage because of poor fico scores, consider a loan modification or forbearance from your lender. Many loan companies are extending modifications to borrowers if they can demonstrate that they have the ability to make the reduced mortgage payment.
5. Re-Apply for a refinance loan. Many borrowers were turned down for a refinance loan in 2010, but that doesn’t mean they won’t qualify to refinance in 2011. Many loan professionals anticipate that some of the home refinancing programs will be more flexible with credit guidelines.
