Archive for FHA refinance
Refinance with a Government Mortgage
Posted by: | CommentsSince the housing and financial crisis erupted a few years ago government mortgage programs have supported refinancing for homeowners with low credit scores and insufficient home equity. With the economy still struggling to correct itself, millions of homeowners continue to strain under the burden of paying their mortgage every month. Millions more are contemplating whether or not they should try to save their homes from foreclosure especially when they are upside down on their loans – owing more on the property than its market value. If you want to save your home but are having trouble getting your bank to work with you, you may be able to get help from the government with a FHA refinance loan insured by the US government.
Consider New Government Mortgage Relief Programs that Won’t Last Forever
Many homeowners have been unable to refinance their adjustable interest rate because they do not have enough equity in their home to qualify for a traditional refinance loan. In an effort to assist these struggling homeowners in addition to reducing the foreclosure rates nationally a new loan relief option became available in the Home Affordable Refinance Program (HARP). This is one of the Obama mortgage programs set up to help the American homeowner refinance their home loans so they can stay in their home. This government refinance program is specifically targeted to homeowners who have been limited in their options by their inability to qualify for a bank refinance through their lender. One of the main criteria for qualification for the program is that your loan must be owned by or guaranteed by Freddie Mac or Fannie Mae. If you are not certain you have a loan through them, you can use the online tool available at the Making Homes Affordable government website to determine if you do.
Get Approved for Low and Affordable Rates with FHA Refinancing
Other qualifications that need to be met in order to take part in the government mortgage refinance program include being underwater (not more than 125% of current market value) on your home and being current on your mortgage payments. You cannot have been more than 30 days late on any of your payment within the previous 12 months. People who have FHA, VA, or USDA loans are not eligible for the program. Last, but not least, you must be able to make the new payments every month. Typically this means you will have a job or some other type of regular income coming in.
In order to get the process started, you will need to contact the company that services your mortgage and ask about the HARP program. They will either take your information over the phone or send you a packet of information to fill out and return to them. It is important that you carefully consider the percentage rate and associated costs of refinancing to make sure you are getting the best deal. Lastly, the government refinance can negatively impact your credit as the lender will report your participation in the program to the credit agency. However, being able to stay in your home and make your monthly payments is certainly worth the temporary hit to your credit score. We suggest comparing loan offers from several experienced government mortgage lenders that have access to all of the FHA loan programs.
FHA Loan Refinancing in 2011
Posted by: | CommentsMany homeowners have turned to government mortgage loans, like FHA for refinancing a mortgage. There are several types of FHA loan refinances, but the FHA streamline and the cash out refinance are the two most common options in 2011. FHA offers a wide variety of refinance choices for qualified borrowers. Lenders like FHA refinancing because the U.S. government insures the mortgages and the underwriting is more flexible than most traditional loan programs. Homeowners choose FHA for refinancing because the enable all types of credit and do not require much equity for loan qualifying purposes. The other reason FHA loan refinancing has risen in popularity is because the FHA mortgage rate is at an all-time low. Homeowners can save thousands of dollars a year if they refinance a mortgage that currently has an interest rate higher than 5.5 or 6%.
- Standard FHA Refinance
- Cash Out loans
- FHA Streamlines
- Home Rehabilitation
- Energy Efficiency
The cost for FHA refinancing will vary depending on the rate and the lender. In most cases borrowers will finance the lending fees in the loan, so they do not have to come out of pocket and pay the lending fees at closing. The FHA streamline loan program does not allow homeowners to finance the fees in the loan. Streamline borrowers must pay for closing costs out of their pocket unless they can convince the lender to cover their closing costs. No cost refinancing with FHA is an option with some lenders, but you will pay a higher FHA rate, so make sure that it is worth it.
If you are saving a significant amount monthly or converting an adjustable to a fixed rate then refinancing likely makes sense financially. When you are shopping for a FHA refinance loan, always compare the rates, fees and total costs when deciding which FHA lender to go with. There are many reasons you should refinance now, rather than wait on the sidelines. First of all, economists are forecasting higher interest rates in 2011 and 2012. Many mortgage insiders believe that Congress will reduce the FHA loan limits for 2012. If the government lowers the 2011 FHA loan limits than less people will be eligible to use FHA for refinancing. Bottom line is that if you can save money now, refinancing is worth your time and efforts.
FHA Refinance Loan Programs
Posted by: | CommentsOver the last few years more homeowners have used the FHA refinance program to renegotiate the terms on their mortgage than ever before. The FHA refinance product has become more universally used as more and more loan companies have become approved FHA lenders who are licensed to originate all types FHA home loan products.
FHA Refinancing Uses a Risk Management Approach
Modern society presents many different possibilities with the lifespan. Choices need to be made in regard to education, career, relationships and financial investments. Deciding to purchase a home is no longer a straightforward course of action for many individuals. A more mobile lifestyle and increasing costs could mean that committing to a long term FHA mortgage will result in undue complications. For the home owner that is unable to meet monthly payments or are just looking to invest money into other aspects of their life, an FHA refinance loan can be a valuable decision. The right amount of planning and some research into rate and term refinance options result in better financial management of personal funds.
Careful consideration of the available alternatives should be completed before any course of action is decided upon. Speaking with a representative to discuss how a FHA loan refinance is initiated suggests how to understand if this is an appropriate route to take. In order to most effectively streamline refinance packages, figure out what makes the most financial sense for the situation. Discovering the ability to cash out refinance to 95% of the original value might be the best option for the circumstances. Acting too soon may result in missing out on potential savings that can be realized with an alternative loan modification package.
- Rate and Term FHA Refinance
- FHA Streamline Refinance with No Appraisal
- Cash Refinancing with FHA to 85%
- FHA Short Refinance for Principal Reductions
During the FHA refinance discovery process, all distinctive factors should be played out to understand the overall effect on long term obligations. It may turn out that choosing the option to streamline refinance to 96.5% is the better solution for the current state of the owner. Comparing all of the different FHA refinancing alternatives at your disposal is the best way to determining the complete repayment costs. Calculate the long term obligations and come up with the total expenditures. The most obvious choice may not be readily apparent. Delving deeper into the specifics of each possibility is the only way to truly understanding the impact on the total expense.
Smart financial management requires becoming fully aware of everything that creates an impact on the bottom line. FHA refinance can be a useful resource to lessen the amount of commitment toward a multi-year home mortgage. A thorough review of FHA short refinance packages will result in a more informed decision. Lessening the impact of surprises in a FHA loan modification program will lower the threats associated with investing in a home. Keeping track of total expenses and understanding all the terms are the best ways to eliminate these risks.
Effects of Higher FHA Mortgage Insurance Premiums
Posted by: | CommentsThe Federal Housing Administration announced last month that new FHA borrowers will see increased rates for the annual FHA mortgage insurance premium by a quarter of a percentage point . The FHA mortgage insurance premium will rise to 1.1 or 1.15% the FHA loan amount for fixed 30-year mortgage rates and 0.25 or 0.50 for 15-year or shorter mortgage terms.
The increased insurance premium applies to FHA loans that are originated on or after April 18th 2011.
FHA said the raise in insurance premiums is only modest increase that would not influence the borrower’s ability to afford the FHA mortgage. A spokesman for the agency said, “The new changes are only a marginal increase and would have little impact on the affordability factors for most home buyers who would qualify for a new home loan.” But many mortgage industry experts have a different take. According to Josh Slemmons of the Mortgage News Post, “Borrowers who have little equity in their home need a FHA refinance, because the program allows refinancing to 96.5%.” Slemmons continued, “Many of these borrowers don’t actually save money because the higher insurance premiums can offset the lower FHA mortgage rates. The New York Times pointed out that many borrowers with less than perfect credit, may not benefit from mortgage rate refinancing, because the mortgage insurance increases their monthly housing expenses too much.
Will FHA mortgage rates continue to rise or can we expect the Fed to lower interest rates like they have done in the past?
The annual premium for 30-year mortgage was just changed in November, to 0.85 percent or 0.9 percent. Whereas previously borrowers only 0.50 percent or 0.55 percent. iServe Lending’s Al Pereida said “The higher premiums equate to a quarter-point increase in interest.” FHA indicated that the new insurance premiums would raise the cost of the average $157,000 mortgage, by about $33 a month, or $396 a year. But borrowers residing in high cost regions like California, Florida, New Jersey New York, Virginia and Washington D.C. could be affected significantly. For example a $475,000 California mortgage would see a monthly increase exceeding $100. In a struggling economy, paying $1,200 more a year could prove to be difficult for many borrowers in California. The agency requires that all borrowers of loans it insures pay the premium.
What if I already have a FHA mortgage in process? The higher insurance premiums do not apply to FHA home loans that already in exist or that is in process and registered with a direct endorsed FHA underwriter. The other FHA mortgages that will not be affected are the reverse home loans or home equity conversion loans.
The bottom line for loan applicants is that they must look at the whole picture (mortgage rate, insurance premiums and total monthly payments) and assess the benefits of refinancing or home financing with FHA. Borrowers can’t just look at a lower FHA interest rate and assume the savings. Needless to say, the next month will likely see a huge spike in loan applications volumes because many consumers will be rushing to get their FHA loan in process before HUD imposes the higher insurance premiums. The higher insurance premiums will likely have an adverse effect on the FHA streamline program as well because lower FHA rates won’t necessarily translate to lower monthly payments. If you are considering buying or refinancing with FHA loan, we recommend you act fast getting your loan in process with an approved FHA lender before the deadline passes.
Relief for Refinancing with Short Refinance and Emergency Homeowner Loan Programs
Posted by: | CommentsHome loan relief is becoming more controversial as the Obama administration continues to make moves to forgive mortgage debt with short refinancing initiatives that will write-down home loans for homeowners that find themselves stuck with underwater mortgages. Republicans and Democrats alike are complaining that Obama is trying to buy votes with debt forgiveness.
With home mortgage rates at the lowest point since Freddie Mac began tracking interest rates, what more can the Federal Reserve do? The Fed has little power left to lift the economy out of its rut. Congress, with an election looming, has no appetite for more stimulus. Typically, the Fed can lower home loan rates in an effort to stimulate consumer spending in hopes that it will invigorate the economy. But the benchmark interest rate controlled by the Fed has been almost zero percent for more than a year now.
The Obama administration already funded the Home Affordable Refinance Program that enabled mortgage refinancing to 125% on select Fannie Mae and Freddie Mac mortgage portfolios in an effort to combat the highly deflated home values that have prevented many Americans from being approved to refinance into a more affordable fixed mortgage payment.
| Eligibility for the HARP home loan relief was difficult and not enough homeowners met the requirements set forth to refinance their underwater mortgages.In a recent article, Deutsche Bank indicated that there may be 20 million underwater mortgage loans that are outstanding by the end of 2011. This puts a significant amount of pressure on homeowners that are already struggling with high unemployment and tighter loan guidelines. |  |
Now the government has given HUD the authority to approve an FHA short refinance option that actually reduces the principal mortgage balances. FHA insures home mortgages, but the agency has nearly used their emergency loan reserves. Who do you think is paying for this? – - Yes the U.S. tax payers will be picking up the tab on this mortgage bail-out initiative as well. And if that’s not enough risk for the government, they also agreed to another mortgage relief initiative with the Emergency Homeowner Loan Program that is designed to help self-employed and un-employed homeowners for six months.
The Fed announced this week they it would use the proceeds from its huge portfolio of mortgage securities to buy government debt. The idea is to make cheap credit even more affordable, particularly for things like mortgage loans. The problem is that Americans who are worried about job stability, not to mention volatility in the stock market, don’t want to borrow. They saved 6.2% of their disposable income this spring.
Sure, the Federal Reserve still has options. It could launch another trillion-plus-dollar program to buy government debt or mortgage securities like it did when it was battling the recession and financial crisis. But the Fed is unlikely to commit that much money unless things get a lot worse. Plus there are risks. Regulators are resistant to push interest rates on low rate home loans because they don’t want to artificially jump-start the housing sector like what happened that inflated the housing bubble. The Fed could slash the rate it pays banks to zero in an effort to keep money parked there, a move aimed at getting banks to lend more, but banks are not exactly feeling cash-rich, either.
As reported previously, home mortgage rates have fallen to record lows. 15-year mortgage rates fell to 3.92 % this week and rates on 30-year mortgage loans were published at 4.44 %. Still, consumers aren’t in a mad rush to purchase homes and most homeowners are unable to meet the tighter guidelines for FHA refinancing. HUD is considering implementing a minimum credit score and FHA guidelines may start requiring these higher risk borrower to put as much as 10% up for down-payments in an effort to stem foreclosures and loan defaults. Many mortgage lenders believe that if the loan requirements were loosened for a period to get the distressed homeowners approved for refinance loans or loan modifications that our housing sectors will rebound locally and nationally.
Will Mortgage Refinance Rates Improve?
Posted by: | CommentsLetter to the Lender: We were recently shopping for a home refinance loan online and we received a handful of mortgage quotes. Obviously we want the lowest mortgage refinance rates possible. We also want a fixed interest rate on a 30-year term and if we can qualify for a no cost refinance mortgage that would be another benefit. One of the lenders offered us a FHA refinance at 5% fixed on a 30-year term with no points and no fees. Another lender offered us a FHA loan at 4.875% on a 30-year term with no points, but there is $3,000 in closing cost that we would either have to pay out of pocket or we could roll into the loan. Which option do you think we should go with? Is no cost mortgage refinancing always the best choice when shopping for a mortgage loan? Do you think we should wait for refinance rates to drop more?
First of all, if you have the opportunity to save money with a fixed rate while interest rates are at all-time lows, you should jump for the opportunity and move forward. Although mortgage interest rates are extremely low today, it is very difficult to qualify for mortgage refinancing, because lenders have tightened guidelines significantly in an effort to minimize loan defaults and foreclosures. Just because you qualify today does not always mean that you will qualify to refinance tomorrow. For example, What if you are approved for a FHA mortgage at 96% loan-to-value now and FHA changes the guidelines to 95%? What if there were several foreclosures on your street that brings your value down so that your loan to value balloons to over 100%? These are both real reason why borrowers don’t qualify for a refinance loan that they once were approved for.
To answer your second question, I must understand your big picture first.
1. Do you plan on selling your home or moving any time soon? No, we would like to retire in this home.
2. What is the balance on your first mortgage? $385,000
3. What is your home’s appraised value? $495,000
4. Do you have a second mortgage and if so did you want to refinance the second mortgage with the new loan? No second mortgage
5. Have the lenders ran your credit and sent you loan disclosures with a Good Faith Estimate? Yes, we have 739 middle fico score and believe it or not we received loan disclosures from both loan companies.
Lender Recommendation: First of all I would recommend rather than going straight for a FHA loan that you get a quote for a conventional mortgage backed by Fannie Mae or Freddie Mac. FHA loans are great but you are below 78% LTV and you qualify for a prime rate loan with no mortgage insurance. Unless you get a 15-year loan, FHA guidelines requires that you pay a mortgage insurance premium when you close the loan, in addition to a monthly insurance charge. In your case that would save you over $100 a month by choosing a loan backed by Fannie or Freddie. Regarding which refinance option to choose — While the no cost mortgage refinance is appealing but if you keep this loan for the life of the term you would save money by paying the $3,000 in closing cost and go with the lower rate option. These are great refinance options and you could not go wrong with either mortgage loan. Mortgage refinance rates are at record lows so the chances of interest rates improving are slim. It certainly is not worth the risk of refinance rates rising, because there will be a time when they go up and do not come down…
FHA Mortgage Loan Programs Expand
Posted by: | CommentsConsumers and mortgage lenders continue to reap the benefits of FHA home loans that boast low FHA rates. The Association of Mortgage Investors announced their support for the second mortgage program announced by the Obama administration to provide a path for reduced principal through a mortgage refinancing program for homeowners who owe more on their mortgage than their house is valued at. Micah Green, an attorney who represents the Association of Mortgage Investors said, “Investors have long felt that the only way to provide homeowners further mortgage relief is to address the affordability and loss of equity issues.” Many home finance executives believe that this step is crucial for the housing market to mend itself long-term.
A few days ago, FHA announced a variety of new home purchase and refinance programs intended to help reduce the number of new home foreclosures. The FHA loan initiatives range from a forbearance plan for unemployed borrowers, to new incentives that encourage principal reductions, to a new FHA refinance option, for which lender participation is voluntary. “Importantly, there are many details of the FHA guidelines that need to be clarified from the latest FHA announcement like, how second mortgages are treated, to ensure that the homeowner’s total debt burden is not excessive,” Green said. 1st and 2nd mortgage investors must be committed to sharing the burden of providing principal reduction in order for troubled homeowners to achieve sustainable relief that will be provided by a properly sized refinanced FHA mortgage, Green says. “This program should also respect the priority of liens. Therefore, principal reductions of senior and junior liens should be carried out accordingly,” he says. FHA mortgage refinancing remains popular with lenders and brokers across the coountry, so chances are HUD will keep FHA lending around.
