Archive for Mortgage News that Matters
Getting Approved for Mortgage Refinancing Is Challenging
Posted by: | Comments2010 may be remembered as the year for the lowest mortgage rates that hardly anyone qualified for. If you meet the lending guidelines, then this may be the best mortgage refinancing time. Unfortunately, with high unemployment and tighter lending requirements, a vast majority of homeowners are unable to qualify for a refinance loan. The Federal Reserve has made significant efforts to stimulate the economy by keeping the interest rates at record lows. At some point the Fed will have to correct the market and begin hiking key interest rates. In years past, when mortgage rates fell, millions of homeowners would rush to refinance their home loan.
Get a Free Refinance Quote with No Obligation!
The Lead Planet, a mortgage lead generation company reported that refinance leads had steadily risen over the last few months. Even the Mortgage Bankers Association reported that home refinance applications spiked in recent weeks as interest rates dipped to record lows consecutively. MBA said that the refinance boom in 2003 experienced a much higher volume of refinance applications.
Freddie Mac indicated last week that the average rate on a 30-year fixed rate loans below $417,000 fell to 4.42% with an average 0.7 point. That was down from 4.44% the previous week and from 5.12% at this time last year. Rates are about one-eighth of a point higher on loans between $417,000 and $729,500. In most cases to get approved for these low conventional mortgage rates, a borrower today must have a FICO score of 720 or higher, a loan-to-value ratio of 80 percent or less and at least two years of fully documented income. However the government mortgage rates are just as low and the guidelines are more forgiving on credit with VA and FHA home loan options.
Refinancing Your Mortgage in this Economy
Posted by: | CommentsWhen rates are at record lows, refinancing your mortgage is likely a wise decision. The process for mortgage loan refinancing has been automated in recent years, however meeting the refinance guidelines has proved to be challenging for most homeowners in 2010. Do you qualify for the best mortgage refinance programs? Does your current mortgage have a pre-payment penalty for early pay off or refinancing? Does your credit score meet the lender requirements for home refinancing? These are all important questions to consider prior to shopping for a refinance loan.
Another reality is that mortgage refinancing with bad credit is very difficult. However both VA and FHA refinance loans are possible for borrowers that can demonstrate strong compensating factors. Many borrowers have strayed away from conventional loans in favor of FHA mortgage refinance solutions.
Mortgage Loan Refinancing Activity Rises 17%
The Mortgage Bankers Association reported yesterday that while interest rates remained the same this past week, home refinancing activity spiked up 17%. With the housing market stalled, nearly all the action in the mortgage market is in refinancing. Less than 20% of mortgage applications were for home purchases, for the week ending August 13the, the MBA reported. The survey covers more than half of U.S. retail residential mortgage applications.
Last week, the Wall Street Journal reported that low home loan rates appeared to be stimulating a significant increase in home refinancing. Many insiders believe that reduced lending fees and no cost refinancing options may have played a role in the increased refinance applications online.
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.
FHA Mortgage Refinance Solutions
Posted by: | CommentsMortgage interest rates have dropped to record lows for three weeks in a row. Unfortunately the benefits of low home loan rates are not able to be realized by a high percentage of homeowners because they do not meet the current mortgage refinance requirements. For the most part, today borrowers need higher credit scores and more home equity. For borrowers who have the credit but not enough equity, Mortgage Refinancing Buzz recommends considering a FHA refinance loan. Many borrowers are migrating from a conventional mortgage to an FHA mortgage, because the conventional guidelines restrict rate and term refinancing between 80 and 90%. FHA loans do have a small mortgage insurance payment in addition to the mortgage payment, but FHA mortgage rates are just as low as the conventional rates.
FHA Mortgage Rates Are Prime for Mortgage Refinancing
FHA loan programs remain more flexible than conforming home loans because the conventional guidelines have been tightened significantly more for borrowers seeking low rate mortgage refinancing solutions. FHA approves mortgage refinancing of up to 97.5% loan-to-value for qualified borrowers. With FHA refinancing, borrowers must always document their income, but these days’ conventional loan programs have eliminated stated income and no income refinancing programs any way.
How Wells Fargo Layoffs Will Affect the Mortgage Loan Industry
Posted by: | CommentsAfter years of hearing negative mortgage news, I have become numb to refinance guideline tightening, lenders going out of business and mortgage giants shedding jobs. For some reason though when Wells Fargo Home Mortgage announced they were eliminating almost 4,000 jobs in their home finance division, I started to wonder —- How could this happen to them? Wells Fargo is a conservative mortgage lender that never sold risky mortgage products like Option ARM’s, No Income No Asset home loans, 125% home equity loans, etc.
Wells Fargo announced today that they were closing their mortgage lending division that was originating subprime mortgages. I started thinking again—–Wells Fargo did not originate has not been originating subprime loans, but they did buy Wachovia who bought World Savings and they certainly originated risky loans. World Savings was the first wholesale lender that extended option ARM loans to mortgage brokers nationwide. Option ARMs are the high risk loans that featured a negative amortization loan payment option. That means that borrowers had the ability to pay less than an “interest only” and the deficit would be applied at the end of the year to the borrower mortgage balance. These loans were the first of their kind, because borrowers could have their outstanding mortgage balance compounding negatively like a credit card. For years World Savings succeeded with the negative amortization loans because they had strict underwriting criteria that required the borrower to demonstrate they had they ability to pay the loan back.
To get approved for the Option ARM, borrowers needed to supply income documentation and have home equity that was assessed by a licensed local appraiser. Self-employed borrowers loved the World Savings Option ARMS because it gave them the ability to pay less in month’s in which their cash flow was low. World Savings offered bad credit mortgage loans to borrowers who had a significant amount of home equity and income that could be documented. After a while however, World Saving got sucked into the competitive mortgage broker market as Countrywide and WAMU were pushing competitive Option ARM products that paid high yield spread premiums that made loan officers wealthy. All the while, Wells Fargo never jumped into the option ARM market. The company maintained it did not want to put their prime loan portfolio in jeopardy because they did not believe the Option ARM product was a good risk. Wachovia Corporation, another prime lender could not resist the option ARMs and the lure of these exotic home loans so they bought World Savings.
In 2006 the subprime mortgage crisis exploded when home loan lenders started going out of business as loan defaults started mounting. Home values started plummeting nationally and in 2007 the economy took a turn for the worst. In 2008 employment skyrocketed and mortgage giants like WAMU and Wachovia were on the verge of bankruptcy. The government stepped in and brokered Chase to take-over WAMU and Wells Fargo to take-over Wachovia.
Don’t you find it interesting that after years of refusing to originate the risky option ARM product that Well Fargo went out and bought, Wachovia who just failed because they bought the biggest option ARM lender, World Savings? I find it strange that after nearly escaping the mortgage industry debacle because of their wavering from their conservative lending philosophy that Wells Fargo would make this kind of catastrophic investment. Did they ever think to do a back-ground check on this billion dollar bank they were buying? This is sad because 4,000 people would still have their job today at Wells if it were not for this impulsive and uncharacteristic transaction. Maybe they should take a page from Obama and blame their mistake on Bush. Regardless of this giant financial blunder, Wells Fargo is still a great company that will survive the series of crisis’s and continue to be America’s most trusted mortgage lender.
Moving forward, I would anticipate Wells Fargo will originate more government finance programs like FHA and VA. Since 1934, FHA home loans have performed better than conventional mortgage products and the government continues to insure FHA refinance and home purchase loans. VA home loans are another good bet, because Wells know that the borrowers have the income in the military and again the government guarantees these loans as well.
I would not hold my breath for Wells to reopen and of their subprime lending divisions anytime soon, nor would expect them to roll out competitive jumbo mortgage loan programs until the housing sector begins to actually rebound.
I’m sure Wells will continue to originate conventional mortgages because that is what they have always done well. The bottom line is that Wells Fargo maintains that good credit borrowers that can document their income deserve low rate home mortgages with minimal lending fees. The company offers stellar customer service and typically their loan officers have extensive financing experience. And who can argue with Wells Fargo on the prime lending criteria as it has performed well through 6 wars and they have been lending for more than half of the time that the United States of America has existed. Some critics may consider the Wells Fargo layoffs to be a setback for the mortgage industry but it is my contention that Wells Fargo is taking a few steps back in an effort to regroup and survive. Like the Los Angeles Lakers did after the 3rd quarter in game 7 against the Celtics, sometime you need a time-out to shake off your mistakes so you get get back and focus on what you are good at. Like the Lakers with basketball, people will associate Wells Fargo with mortgage lending for many years to come.
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%.
30-Year Fixed Rate Home Loans and 5-year ARMs Fall to Record Low
Posted by: | CommentsInterest rates on fixed rate 30-year home loans for refinance or purchase officially hit record lows today! On Thursday, Freddie Mac released their report that also indicated the 5-year adjustable-rate mortgage dropped to record lows this week acccording to the survey of conforming mortgage rates. The 30-year fixed rate mortgage reported averages of 4.69% for the week ending June 24th. This was lower than the low rates of 4.75% from the previous week and 5.42% a year ago. Fifteen-year fixed rate mortgage loans averaged 4.13%, down from 4.20% last week and 4.87% a year ago. The 10-year fixed rate mortgage has fallen to 3.75% and 3.875% on the no cost mortgage option.
VA home loans are still available at record low rates as well. If you already have a VA mortgage and want a lower rate talk to one of our VA lenders about qualifying for the VA streamline.
Freddie Mac Says Lowest Fixed 30 Year Mortgage Loans Since They Began Recording Rates in 1971
Conventional and FHA mortgage lenders reported averages of the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.84% this week, down from 3.89% last week and 4.99% a year ago.
One-year Treasury-indexed ARMs averaged 3.77%, down from 3.82% last week and 4.93% a year ago. While not a record, this is the lowest the ARM has been since the week ending May 6, 2004, when it averaged 3.76%.
To lock into these home mortgage rates, the 30-year fixed-rate mortgage and both ARMs required payment of an average 0.7 point and the 15-year fixed rate mortgage required an average 0.6 point. A point is 1% of the home loan amount, charged as prepaid interest. According to Frank Nothaft of Freddie Mac “Mortgage rates for all but traditional 1-year ARMs hit all-time record lows this week in our survey while activity in the housing market slowed in May following the expiration of the home-buyer tax credit”. “Freddie Mac began collecting rates for 30-year fixed loans in April 1971, 15-year fixed home loans in September 1991 and 5-year ARMs in January 2005.”