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We get many emails from consumers seeking guidance in how to qualify for a handful of high risk mortgages that seem to have obstacles around them. I list 3 common questions below for mortgage loans that appear to be in high demand this year. The only problem is that all three of the home loans is not regarded highly with most conventional prime lenders in 2013.

  1. How do I get approved with bad credit mortgage lenders?  We see thousands of borrowers that need a mortgage but happen to have credit scores below the threshold that today’s conventional lenders are seeking. With that being said, many people with low fico scores are migrating towards government loans, because they have more flexible guidelines with respect to credit. FHA still accepts borrowers with credit scores as low as 500 and VA still has no minimum credit scores in their guidelines for buying or refinancing. That doesn’t mean that government lenders are looking to approve people with poor credit, but underwriters can and do make exceptions when borrowers have compensating factors.
  2. Can I get a home loan with no down payment?  Yes 100% home loans that require zero down-payment are available to people who meet the criteria of USDA and VA mortgage programs. The USDA is a loan reserved primarily for people that are buying or refinancing in a rural region of the country. The VA mortgage is a program designed for military borrowers and retired veterans. Both loan programs require nothing down and the interest rates are competitive.
  3. Do stated Income mortgage loans exist? Yes and No. Hard money and subprime lenders still offer “stated income loans.” In wake of the recent housing crisis, conventional and government lenders state that they do not allow stated or no income documentation loans. They require full documentation with their purchase and refinance programs. However, the “streamline” program which is endorsed by FHA and VA does not require pay-stubs, W2’s or verification of income from the borrower’s employer. They do in fact do a verification of employment in an effort to verify that the borrower still has a job.  So in a sense, the government programs still allow stated income mortgages to borrowers that already have an existing mortgage with either FHA or VA. No cash out is allowed with the streamline either.
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Over the last six years, most of the country has reported negative equity from declining home sales and foreclosures. Most homeowners find themselves stuck with an upside down mortgage because their balance owed is more than the property is worth. Millions of applicants have been turned down for refinancing because they have an “underwater mortgage”, until this new program hits the streets.

Will the Government Shut Off the Aid to Borrowers that Need a No Equity Refinance?

There have been many government loan programs that have attempted to help distressed borrowers with underwater refinancing but very few have succeeded. The FHASecure, Hope for Homeowners, EHLP, HAMP, Fannie Mae Du Refi-Plus and the Home Affordable Refinance Program all provided a program to refinance underwater mortgages, but very few loans were closed when it was all said and done. On paper, these relief plans all looked great, but when the lenders and insurance companies read the fine print of these programs they were turned off. They offered a path to achieve a low fixed interest rate with loan to values ranging from 105 to 125% but lenders never felt comfortable originating the underwater mortgage programs mostly because the risk was too great. These federal programs neglected to solve the risk factors most refinance lenders were simply not willing to take.

Finally the Federal Government, Fannie Mae, Freddie Mac and FHA came together to overcome the obstacles that lenders and insurance companies had and they rolled out several solutions for distressed borrowers to actually achieve an underwater mortgage refinance. With home values going up and down like a row boat drifting out to sea with hurricane swells, it became clear that a 125% cap on loan to value ratios was not enough nationally. In many regions like Arizona, California, Nevada, Florida, Georgia New Jersey, Maryland and Virginia, loan to values greatly exceeded the 125% threshold. We saw reports of upside down mortgages at 200 and 300% loan to value in some hard-hit regions. So the only way to overcome the negative equity dilemma was to completely scrap the ratio between loan balance and property value. The other issue was the “lender risk”, so the Federal Agencies agreed to minimize the risk so that loan companies and banks would participate in the underwater refinance programs. The HARP 2.0 was born with loan to value limits and limited liabilities for HARP lenders.

1. Are you eligible for no equity refinancing from one of the government sponsored entities like Fannie Mae or Freddie Mac? You may have an upside down mortgage, but your lien must be owned or serviced by Fannie Mae(FNMA) or Freddie Mac(FMCC) and have been closed prior to June 1, 2009.

2. Verify with Fannie Mae whether your 1st loan online is owned by them > Fannie Mae Loan Look Up

3. Check to see if Freddie Mac owns your mortgage > See if Freddie Own Your Home Loan

4. Verify if you meet the 80% minimum loan to value criteria under the HARP 2.0 guidelines

5. Are you below the 45% maximum debt to income ratio limit?

According to a KBW Research report, over than 1.6 million homeowner have closed on a HARP refinance loan to date, of which 618,217 refinances took place in 2012. The reality is that the pool of qualified HARP applicants is shrinking significantly. Many consumers bought homes in the U.S. after the “May 31, 2009” cut-off that Fannie and Freddie require for refinancing under the HARP umbrella. That means that there are tens of millions who have an underwater mortgage but do not meet HARP requirements to refinance.

Looking forward at Obama’s second term, many finance analysts believe that the Obama Administration will have more liberty to take their mandate and force the issue of the Federal government’s role in housing and how it relates to the home finance industry. Only time will tell, but to Obama’s second term may lead to HARP 3 and the federal mandate that banks write-down mortgages to current values. Of course these are very controversial topics that you can expect to see fighting on the Hill as the Republican led Congress and the Democratic led Senate make these issues political.

 

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All signs are pointing towards affordable housing with low interest rates over the next few years regardless of who gets elected to be the next President of the United States.  Just last month the Federal Reserve committed to QE3 and further backing on mortgages which will enhance secondary markets. Money has been cheap for the last few years in the residential financing arena and with the economy sputtering along with an anemic 1.3% GDP, we anticipate low rates for home loans and refinancing at least for the foreseeable future.

Can Rates on Home Loans Stay Low Forever? The short-answer is “No”, but with a double dip recession looming and an eager Federal Reserve not afraid to increase cash flow by printing more money, the record-low rates could stretch out for a few more years.

Can Interest Rates Drop Even Further? “Yes”, it is hard to believe but we could actually see the fixed 30-year mortgage fall below 3% for the first time in history this year. The fixed 15-year mortgage could fall below 2.5% and home improvement loan rates may fall to 3% as well.

If the bond market responds positively to the poor results in the economy, lower rates are possible in 2013 and beyond. If Romney is elected, we may see the Dodd-Frank laws vanish and that would certainly ease the requirements on mortgage lenders. This would like bring down the lending costs significantly and we may see no cost mortgage refinancing with even lower interest rates. Many pundits in the media have speculated that Romney may eliminate the “mortgage interest deduction”, but I find it hard to imagine anyone stripping away such a popular deduction that would affect so many “middle class” Americans. Romney has made it clear that he want to   the housing sector to rebound quicker than it has been so the mortgage interest deduction certainly appears to be safe for now.

The HARP program has certainly helped thousands of underwater homeowners get into a mortgage with a lower interest rate. If HARP 3.0 is expanded to borrowers that do not have loans owned by Fannie Mae (FNMA) or Freddie Mac (FMCC), we will likely see the biggest surge in home refinancing of our lifetime, because millions of consumers that were previously not eligible for the first two HARP programs will have a new opportunity to refinance their upside down mortgages regardless of how much negative equity they may have incurred.

Some of the looming questions that could adversely affect the mortgage industry; Will the Federal Housing Administration continue to extend financing to borrowers with low credit scores?, Will FHA raise down-payment requirements from 3.5% to 10%? Will Fannie and Freddie return to the form 5-years ago when they were buying risky mortgages with little or no income documentation?

Only time will tell, but the executives at Nationwide are hopeful that 2013 will be a strong year for origination and the housing sector in general. My God bless America with Affordable Housing in the year to come.

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The U.S. economy has been fighting to escape the recession and the housing crisis has emerged as the National focus. Meanwhile the Obama Administration, the Federal Reserve and the entire mortgage industry have joined forces with record low refinance rates and aggressive home loan programs. Can these creative financial minds put an end to the unstable housing sector? Only time will tell, but we are giving these entities an “A” for effort.

This will be Remembered as the Era for Record Low Rate Mortgage Refinancing

The Mortgage Bankers Association announced earlier this month that 2012 has seen the lowest rates for mortgage refinancing since they have been keeping records.

The time for securing the best rate from a refinance loan has never been more right than today. Qualifying for these record low interest rates has been a challenge for many who have seen their incomes and credit scores fall in recent years.

The following refinance loans below have emerged as the leading refinance solutions in America at a time when finances are more important  than ever. The stakes are high for refinancing because many homeowners have an opportunity to save thousands of dollars a year.

1. HARP Refinance – The guidelines for the Home Affordable Refinance have seen drastic changes in 2012. Just try and stop these underwater borrowers from refinancing. Fannie Mae and Freddie Mac made the “loan to value” stipulations disappear for the first time ever.

2. FHA Streamline Refinance –The Federal Housing Administration nearly copied the refinance guidelines from Fannie and Freddie when the altered the home equity requirements to become a non-factor. No appraisal is needed now for existing FHA customers that seek to lower their interest rate through the streamline program. Another reason why the streamline has become so popular is that it is one of the few loans that do not require income documentation. Refinance lenders simply verify the borrower’s employment rather than examining their W2’s, pay-stubs and tax returns for income like most loans require.

3. Bad Credit Refinance –  The average credit score has plummeted in the last few years causing the demand for refinancing with bad credit to soar. Fortunately, Nationwide has become a subprime leader for refinancing. The VA continues to have no minimum credit score for borrowers seeking a refinance and FHA is only asking for a minimum credit score of 500.

4. Cash Out Refinance – With interest rates shattering record once again in 2012 it should come as no surprise that homeowners have been looking to get refinance and get cash out.  FHA allows cash back on 85% LTV refinancing and VA approved military borrowers to get cash back at 90% LTV. Conventional lenders have been requiring 80% LTV for borrowers that want money back and homeowners who are blessed with 20% home equity in their property continue to tap it because money is so cheap. Imagine how much money people are saving who are consolidating 20% credit card debt into a mortgage below 4 percent.

5. 30-Year Fixed Mortgage Refinance – With fixed 30-year rates available at 3.5% (APR 3.67%)  it makes sense that homeowners would migrate towards the most secure and affordable loan of all-time. With many refinance lenders easing the guidelines for the 30-year mortgage it has become a natural progression for new homeowners to refinance when the rates fall and the guidelines improve.

By now, most consumers understand that mortgage refinance loans cannot be this attractive forever. Expect to see interest rates jump when the housing crisis is visible in the rear-view mirror or if defaults begin to mount again. At the end of the day 2012 will be remembered for high unemployment and historic interest rate opportunities for mortgage refinance loans.

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Buying a house can be a wonderful experience if you are prepared with a pre-approved home loan and have hired a good local realtor that understand the market and your needs. Obviously signing a hundred legal documents that commit you to a thirty-year mortgage and a house that requires 360 monthly payments will make you think. Home ownership certainly brings new opportunities and tax deductions that are appealing financial, but you want to make sure you are ready before making this major commitment.

With that being said, most people want to own a home in their lifetime so I am asking you this question – – – What are you waiting for? If you have the financial means to come up with the required down-payment and demonstrate enough saving for 3-6 months of housing expenses, then you should pull the trigger on buying a home.  Here’s why: Home prices have dropped drastically to 2003 levels and home mortgage rates have declined to an all-time low. Therefore it is unlikely that you will ever see home financing loans more affordable in our lifetime.


Get Organized and Layout a Strategy to Finance a Home in 2012

The reality is that as soon as banks can recover from the foreclosure crisis and property values shift towards positive territory, interest rates will climb significantly. According to a Mortgage Bankers Association spokesman, “Having the ability to get approved for a fixed rate 30-year mortgage below 4% with only a 3.5% down-payment is a beautiful thing.” This type of low down-payment home loans will disappear and likely not return in our lifetime.  Therefore, the sense of urgency to get approved for home purchase loan today is very real and if we recommend striking while the iron is hot. Nobody knows when interest rates will start to climb, but when you consider history it is very possible that rates double in three or four years.

Choose from the Following Home Financing Programs:

  • Loans for First Time Home Buyers
  • Mortgage Bad Credit Insured by the FHA
  • No Credit Home Loans
  • Conventional Home Mortgages
  • Military Financing with a VA Loan
  • USDA Mortgage up 100% LTV
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What are the advantages of 30-year mortgage rates? Many new home buyers like the lower starting interest rates available on adjustable rate mortgages. They see these hybrid ARMs as a big advantage, because the rates are fixed for a period of years before resetting to a variable interest rate. It allows them to qualify for a larger home. However, an ARM has distinct disadvantages when it comes to managing your personal finances and keeping your house payments under control.

Here are some of the advantages to consider with a fixed rate 30-year mortgage:

  1. The interest rate remains constant. If you fix your mortgage rates at the lowest fixed 30-year mortgage rates in decades, you will have the same rate for the life of the loan. That means you are not going to see a minor rate adjustment on an ARM loan make your payments outrageous.
  2. Payments remain constant. When interest rates start rising, it becomes difficult to refinance an adjustable rate mortgage.  Borrowers will start seeing, their mortgage rates start going up. Let’s look at an example. A mortgage of $300,000 with an initial mortgage rate of 4%, you will have a payment of $1,432.25 per month. If that rate goes up to 6.5%, the payment goes up to $1896.20. If the rate goes up to 9%, the payment goes up to $2,413.86. If you got a fixed rate 30-year mortgage at 6%, the payments would be $1798.65 with no chance of adjustment.
  3. Budgeting is easier. You have a fixed payment. You know that each month for the next 30 years. You will need to pay $X. As your income increases over time, that amount stays the same. You can use the extra income to save for retirement or to pay down the principal on your mortgage. The choice is completely up to you.
  4. A fixed rate 30-year mortgage allows you to weather rate changes with grace. One of the biggest problems in recent real estate troubles is the adjustable mortgage rates that started going up. A single percentage rate chance can make your payments jump quickly. With a 30-year mortgage refinance, that is never a concern. Your neighbors will sweat while you smile and shake your head.

These are a few of the advantages of a 30-year fixed rate mortgage refinancing. With that fixed payment amount, you will only need to adjust payments as your escrow changes. Your principal and interest will remain the same. You can pay the loan ahead with extra money you get. However, you will never have to scramble to make a mortgage payment that just jumped by a couple hundred dollars a month.

 

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It’s no secret that the housing sector is struggling.  Low fixed rates and aggressive mortgage relief from the government has not put an end to the U.S. housing crisis.

Yesterday, the Federal Reserve committed to keeping the key rates at nearly zero for another two years.  In an effort to keep borrowing attractive, the Fed has extended additional measures buy committing to buy mortgage bad credit bundles from the big banks like Bank of America, Chase and Citibank. As the stock market goes up and down like a roller-coaster and foreclosures continue to pile up, there are very few reasons to be bullish about the real estate market in any of the 50 states. There are measures that could be taken if we were serious about putting the  housing crisis to rest.

Below are 11 Bold Suggestions for Overcoming this Housing Mess

  1. Obama and the Republican Presidential Candidate should commit to eliminating the capital gains tax. This will spur investing and stimulate the job market and reduce the unemployment rate nationally.
  2. The Federal Reserve needs to stop printing money.  Devaluing the dollar is not enhancing consumer confidence that ultimately affects home sales.
  3. Mortgage lenders need to loosen guidelines for home refinance and purchase loans. This doesn’t mean we should go back to 2005 guidelines that promoted no money down loans for people with marginal credit. Nor am I suggesting stated income loans for borrowers that can’t afford a mortgage payment. Somewhere between 2005 and 2011 guidelines will help a lot.  Borrowers who are interested in fixed mortgage refinancing and have demonstrated the ability to make their mortgage payment even if they have an underwater mortgage makes sense.
  4. U.S. government should extend a $10,000 tax credit for first time home buyers.  This will spur home buying and a $7,500 tax credit should be offered to existing and former homeowners as well.
  5. Obama should commit to rebuilding Fannie Mae and Freddie Mac. Wall street and investors will respond more favorably if the Obama administration will lay out a real plan that calls for rebuilding government mortgage giants like Fannie Freddie rather than spreading rumors that you plan to dismantle and eliminate these finance agencies that the home finance sector has been relying on the last forty years.
  6. HUD should call for FHA to reduce mortgage insurance premiums for the next few years. By reducing the mortgage insurance FHA will reduce borrower’s monthly housing expenses. FHA loans have seen their popularity fall recently as they have increased the insurance premium three times in two years.  Yes FHA rates are low but people are not attracted to hefty mortgage insurance monthly that washes out their savings.
  7. Private money lenders should roll out new low rate home purchase loans with a reduced 5% down-payment requirement.
  8. The government should expand the Home Affordable Refinance Program to help more struggling homeowners that are struggling with an underwater mortgage.  By expanding the 125% loan program, more homeowners will be able to avoid foreclosures and lenders will see the delinquency rates fall as well.
  9. The Fannie Mae and Freddie Mac conforming loan limits should be extended. They are on track to be lowered any day and this does not stimulate home sales.
  10. Congress should increase 2012 FHA loan limits rather than decrease them. FHA mortgage limits are scheduled to fall any day.  This significantly high cost regions like California, Connecticut, Colorado, Florida, New York, New Jersey, Washington DC, and Virginia. Many homeowners in these states own second properties in other states, so raising the loan limits will indirectly help these other states as well.
  11. Repeal the Dodd-Frank financial reform bill.   This is a poorly written piece of legislation was created so Chris Dodd, Barney Frank and their friends could grand-stand and pretend like they were part of the solution.
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