Archive for Loan Article
The Mortgage Loan of a Lifetime
Posted by: | CommentsMany people are baffled that the record low mortgage rates have not sparked a refinance or housing boom this year. In the past when the Federal Reserve took measures like discounting key interest rates it usually spurred a housing boom that led to a sharp rise in homeownership. In 2010 there is a decrease in homeownership mostly because even though money is cheap it is still not financially feasible for struggling consumers who are experiencing a loss of income and the threat for job loss is the most real it has been since the Great Depression in the 1930’s.
Lowest Mortgage Rates Since 1971
Mortgage refinance applications have risen in recent weeks, but only a small percentage of loan applicants qualify for home buying or mortgage refinancing. Mortgage lenders have significantly tightened home loan guidelines in an effort to reduce foreclosures. Even government mortgage finance options like VA and FHA mortgage loans have experienced major changes that make qualifying for a refinance or purchase more difficult than ever. According to BofA mortgage executive, Jeff Moran, “Home mortgages have truly become a commodity, because the interest rates are very appealing, but very few borrowers meet the criteria to qualify for these record low interest rates.” Moran continued, “If a borrower has good credit, good income and minimal liabilities then there is a real opportunity for the applicant to qualify for the mortgage loan of a lifetime.”
Popular loan programs like cash out second mortgage loans and interest only mortgages have almost completely disappeared. Bad credit mortgage options are few and far between with FHA and VA home loans occasionally taking a risk on a borrower with a poor credit score. Home equity loans were once offered at 125%, but now you can consider yourself truly blessed if you qualify for a 90% equity loan. Even the FHA streamline refinance loan requires borrowers to pay for the closing costs “out of pocket.” Most borrowers are using a FHA loan for cash out refinancing because they do not require a 700 credit score like most home equity lenders demand today.
Undoubtedly the pool of borrowers that qualify for mortgage refinancing or home buying has shrunk, but maybe there is a silver lining. In the near future interest rates will likely rise. If you are one of the chosen few who meet today’s lending requirements you just might qualify for the mortgage loan of a lifetime. If you do qualify -- - -- Seize the opportunity and lock into the lowest fixed rate ever!
Top 5 Mortgage Refinance Loans in 2010
Posted by: | Comments2010 has been an interesting year for mortgage refinancing for both homeowners and lending professionals. Qualifying for a refinance loan has certainly been an easier process in years past. Since the subprime mortgage crash of 2006, the mortgage industry has transformed mortgage refinance programs to reduce risk and decrease foreclosure rates.
Mortgage refinance rates are at record lows and homeowners that do qualify can benefit from a fixed rate mortgage that will reduce their monthly payment and eliminate years of compounding interest. There is also an opportunity for millions of homeowners to escape the fear of their adjustable rate home loans. Al Pereida, the branch manager for iServe Lending in Irvine, California said, “Homeowners should not pass up these opportunities to lock in fixed rate mortgages below 5%.”
Listed below are the Top 5 Mortgage Refinance Loans in 2010:
1. FHA Refinance Loan – This is the most common refinance loan for homeowners this year, because FHA doesn’t require much equity and the credit score requirements are not as stringent as conventional lending guidelines. Low credit scores and lack of equity are the biggest obstacles for homeowners in this market.
2. VA Streamline Refinance – This is the most cost effective refinance loan available this year, but you must have VA loan eligibility. The VA refinance overlooks the lack of equity because there is no appraisal needed for the VA streamline program.
3. No Cost Mortgage Refinance – Refinancing into a low rate mortgage with no points and no fees is a great option for borrowers with good credit scores and worthy income documentation.
4. Loan Modification – This is technically not a refinance loan, but it accomplishes the same goal of achieving a lower monthly payment. Millions of distressed homeowners find themselves being rejected by lenders because they do not meet the tighter mortgage refinance guidelines.
5. Cash Out Refinance – Home equity loans have nearly vanished so the cash out refinance has remained a popular choice for home improvement financing and debt consolidation. FHA refinance loans allow 85% cash out. VA refinancing guidelines allow 90% cash out and most conventional lenders limit cash out to 80%.
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…
No Cost Mortgage Refinancing
Posted by: | CommentsIf you have good credit, home equity and your interest rate is above 5%, chances are that you will benefit from no cost refinancing. Qualifying for a no cost mortgage is not as easy as it was a few years ago. For conforming, FHA and VA home loans you will need to document your income if you plan on qualifying for no cost mortgage refinancing. Fannie Mae and Freddie Mac no longer allow no income mortgage refinancing so you will need to document your income if you want to qualify for a no cost mortgage. For most of the conventional mortgage products you will need over a 700 fico score if you want to be eligible for the no cost mortgage refinancing incentives.
FHA and VA have never allowed stated or no income mortgage options, so nothing has changed for income documentation requirements with government home mortgages. FHA guidelines changed recently, so you will need good credit scores (0ver 640) if you work with a lender like Nationwide who offer no cost refinance options with the FHA loan program.
We continue to offer no point mortgage loans with most of our refinance programs. With no point refinancing, a borrower will have no origination fees, but the 3rd-party lending fees like title, escrow and appraisal will be the borrower’s responsibility. In most cases we can offer home refinancing with no closing costs out of pocket. With mortgage refinance rates so low and no cost refinancing incentives, we strongly recommend taking advantage of our discounted loan refinance.
Mortgage Loan Applications Surge
Posted by: | CommentsAccording to the Mortgage Bankers Association, the demand for mortgage loans increased to a seven-month high last week as consumers rushed to get federal homebuyer tax credits that ended April 30th. Home loan applications jumped 13% in the week ended April 30th to the highest level since early October, overshadowing a 2.1% drop in home refinancing demand. Total mortgage loan applications rose by a seasonally adjusted 4 %, the trade group reported. It was the third straight weekly increase in purchase applications, rising almost 24% in the month. MBA said the share of mortgage refinancing fell to 51.9% of all applications, the lowest since early July 2009.
The thirty-year mortgage rates dropped 0.06 percentage point to 5.02 %, the lowest rate since mid-March. Eligible borrowers seeking to take advantage of federal tax credits of $8,000 for first-time buyers and $6,500 for existing homeowners were required to sign contracts by last Friday and to close on their mortgage loans by June 30th. The big question now is whether the U.S. housing market has enough traction to continue recovering without government help.
In addition to the tax credit, the Federal Reserve bought more than $1.4 trillion mortgage-backed securities intended to keep home loan rates down to revive the housing market. That program ended on March 31. “All the data that we’ve seen recently point to the fact that consumers are in a better place today than they were six months ago, and because of that they will likely be more active in the housing market,” Schenk said. The difficult labor market, however, will keep the housing recovery slow, he added.
Housing demand will likely falter after the recent influx of home sales ahead of the tax credit expiration, but then mount a slow upturn, many industry experts expect. New home sales rose almost 27% in March, and sales of existing home increased by 6.8%. According to UBS economists, “The pending home sales index, based on initial contracts, will likely be boosted again in April, with some payback thereafter. “However, we believe the combination of low prices, still relatively low mortgage refinance rates and the nascent recovery in employment will support home sales later in the year.”
The latest unemployment figures will be reported on Friday. April’s rate is seen holding at 9.7% for a fourth straight month, based on a Reuters poll, after touching a more than 26-year peak over 10% last year. Homeowners have increasingly turned to the government for home financing with programs like FHA home loans. These FHA loan programs including low down-payment home loan products from FHA. The MBA said that more than one-half of all purchase applications last week were for government mortgage loans, the highest share in two decades.
Prime credit borrowers are really taking advantage of their leverage in this market as no cost mortgage refinancing has become very popular with people who have ficos that exceed the 720 range. It is important that you do the math on these no cost loans, because the interest rate is typically higher so you need to make sure it makes sense financially to payt a higher rate in an effort to eliminate closing costs.
FHA Premium Rising for Bad Credit Mortgage Loans
Posted by: | CommentsFHA loan programs may see changes in 2010. The HUD is seeking White House approval to increase the upfront mortgage insurance premium charged by the Federal Housing Administration to borrowers. FHA officials announced more changes, including tighter underwriting standards for refinance mortgages and new home loans. If approved by the White House, FHA mortgage loans will see an increase to 1.75% upfront mortgage premium paid by borrowers who do not have enough equity to mitigate the risk of a loan default.
Which Mortgage Refinance Loan is the Best for You?
Posted by: | CommentsThere are many important determining factors in choosing the best refinance loan for you and your family. The first question you need to ask yourself is which refinance programs do you qualify for. The second question to consider…What is the purpose for refinancing the home loan? What are the various options for refinance loan programs?
| • | Rate and Term Refinancing for Lower Payments |
| • | Cash Out Refinancing for Debt Consolidation |
| • | Save Money by Refinancing Home Equity Credit Lines |
| • | FHA 203k Loans to Finance Cash for Home Remodeling |
| • | 30-Year Fixed Rate Home Loans |
| • | 100% VA Mortgage Refinance |
| • | FHA Streamline Loans for FHA Borrowers |
| • | Combine 1st & 2nd Mortgage Loans for 1 Lower Payment |
Our mortgage refinance team offers a free consultation that usually reveals the best solution based your financial needs, goals and lending qualifications. Our experienced loan professionals can help you understand the details and differences between conventional and FHA mortgage loans. If you are considering a cash out or FHA streamline refinance, we will help you review the FHA requirements for mortgage refinancing.