The low mortgages rates have been available to consumers with high credit scores. Higher interest rates will be offered to borrowers with lower credit scores under the new pricing system.  According to mortgage advisor, Sandy Sarconi, “MGIC may be too late reacting to FHA because they have taken 30% of the market-share.”

Presently, FHA loan guidelines do not consider credit scores when pricing its insurance for FHA mortgage loans.  The new prices will be effective May 1, the company said.  In January, MGIC reported its tenth straight quarterly loss because of increasing delinquencies. More and more homeowners are failing to make their mortgage loan payment on time. The company did make a statement that they anticipate home loan delinquencies to reduce towards the end of 2010.

Let’s face it millions of homeowners owe more than their home is worth.  Fannie Mae and Freddie Mac offer the Home Affordable Refinance Program and the DU Refinance Plus program that FHA allows you to refinance your mortgage without an appraisal (so the fact that your house’s value has dropped like a piano from the roof is irrelevant) if you meet certain guidelines.

The FHA streamline refinance has been surging in popularity with FHA lenders because it meets the needs of so many homeowners that are blessed with an FHA loan.  FHA mortgage rates are as low as they have ever been and FHA loan companies have become much more efficient processing government refinance loans.

FHA Streamline Refinance Requirements

1. You have to have made at least six payments on your current FHA loan.

2. If you have had your FHA loan for less than 12 months, all the loan payments must have been made in a timely manner. If you have had the FHA mortgage for more than 12 months, you can have been late only once in the last year and must have paid on time the last 3 months.

3. Your new FHA loan payment must be at least 5% lower than your old payment, or you must be replacing an ARM with a fixed loan (the new FHA rate can’t be more than 2% higher) or hybrid loan (the new loan payment can’t be more than 20% higher), or reducing the term of your FHA loan, or reducing your interest rate by at least 2% (if replacing a fixed home loan with an ARM).

4. The property being refinanced must be your primary residence.

5. Closing costs for FHA streamline loans must be paid upfront (with the exception of mortgage insurance premium (MIP), which can be financed in the new loan.

Most mortgage insiders have concluded that higher mortgage rates are on the horizon. But even if the Fed holds onto the mortgage loans it has already purchased, the act of no longer buying additional home mortgages is likely to increase mortgage rates in the coming weeks. Experts say a jump of at least a quarter to a half percentage point is likely.  Mortgage refinancing activity continues to decline and home loan defaults have been reported at record levels.

San Francisco Federal Reserve President Janet Yellen warned of higher rates in a speech Monday. Fed Chairman Ben Bernanke is likely to take questions about the Fed’s mortgage program when he testifies about economic conditions on Capitol Hill Wednesday and Thursday.

The spread between the interest on 30-year fixed rate home loans and the benchmark 10-year Treasury note now stands at about 1.2 percentage points. Before the financial crisis, this spread was typically closer to 1.5 percentage points

To obtain the 30-year fixed-rate mortgage under 5%, borrowers would be required to pay an average 1.50 points.  The 5/1 ARM looks good as borrowers can lock in at 4.25% with no points.

• Record low rates starting at 4.625% fixed
• FHA refinance programs offer additional flexibility
• Choose from 30 and 40 Year fixed rate terms

First Time Home Buyer Tax Credit Deadline Extended

For homes bought in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer’s main residence within a three-year period following the purchase.  First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date.

General Information Homebuyers who purchased a home in 2008, 2009 or 2010 may be able to take advantage of the first-time homebuyer credit. The credit:

• Applies only to homes used as a taxpayer’s principal residence.

• Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.

• Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

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.

There really is no security in this investment anymore.  Few, if any investors actually service the loans, and with the housing industry still very weak, and loan servicers holding almost all the power over the loans, investors are no longer flocking to purchase the loans from the original lenders.  The lenders control modifications, payment forebearance rights, collections pricesses, foreclosure proceedings decisions, etc. 

It is predicted that in order to entice investors, mortgage rates will have to rise dramatically in the near future.  We are hearing rates numbers in the mid 5% range up to “the sky’s the limit” types of rates.

A second mortgage provides you the ability to eliminate your variable rate 2^nd mortgage into a fixed rate mortgage with more stable terms. In most cases, refinancing adjustable rate loans and HELOC’s will save you thousands of dollars a year in interest by converting the compounded interest to a simple interest loan.  If you are considering mortgage refinancing and want to get cash out with a FHA mortgage that lets you to borrow up to 95% of LTV.  Take advantage record low rates and refinance your second mortgage and enjoy the financial benefits.

Yesterday, the Federal Reserve announced they were keeping mortgage rates unchanged and extending the government mortgage buying program which is good news for Americans but great news for borrowers living in California.  2010 may be the year that California home values rebound and many distressed homeowners have found comfort with the Home Affordable Refinance Program because it enables borrowers with no equity to refinance their Fannie Mae or Freddie Mac loans up to 125%.