The mortgage rates we're witnessing today can help many Washington state homeowners if they take advantage by refinancing. Even if your home's value has declined due to your homes in your neighborhood selling for less, you may still have options thanks to the Home Affordable Refinance program (set to expire in 2011) and FHA streamline refinances.
Many of the home owners I'm helping with refinancing are:
- reducing their monthly mortgage and creating more monthly cash flow to help with their budgets;
- converting adjustable rate mortgages or interest only mortgage to fixed rates;
- shortening their mortgage terms;
- paying off second mortgage by including them in their refinance or paying off debts.
The Home Affordable refinance(HARP) is available for conventional loans that are securitized by Fannie Mae or Freddie Mac–this is different than who you make your mortgage payment to (the bank or mortgage servicer). The Making Home Affordable Program allows for negative home equity and may not require an appraisal. If your current mortgage doesn't have private mortgage insurance, then the new Home Affordable refi will not have mortgage insurance either–regardless of the loan to value! This program is available for owner occupied, rental homes and vacation homes. NOTE: Second mortgages cannot be paid off with this program, however they can be subordinated.
Here's an example of HARP refi quotes (as of 12:30 today) based on a loan amount of $400,000 and an appraised value of $381,000 (roughly 105% loan to value) using a 30 year fixed with mid-credit scores of 740 and priced with zero points (origination or discount):
Owner occupied: 4.750% (apr 4.813) priced with 0 points.
Investment property/non-owner occupied: 5.125% (apr 5.360) priced with 0 points.
If your current mortgage is FHA, then you can opt for an FHA streamlined refinance. If you have a little equity, you can opt to have an appraisal and finance up to 97% of the appraised value to include your closing costs and prepaids. If your home does not have equity, and you have the funds available, a "no appraisal" option is available. With the no-appraisal streamline FHA refinance, closing costs and prepaids cannot be financed. Your loan amount is limited to your current balance less a possible credit of your original upfront mortgage insurance premium and your new upfront mortgage insurance premium can be financed.
Here are FHA refinance rates (as of 12:30 today):
4.500% priced with 0 points (apr 5.090) appraisal optional. Loan amounts up to $417,000.
4.750% priced with 0 points (apr 5.518) appraisal optional. Loan amounts $417,001 – $567,500 in King, Pierce and Snohomish Counties.
FHA currently will allow up to an 85% loan to value for a "cash-out" refinance, which may include paying off a second non-purchase money second mortgage. "Cash-out" would not be a FHA streamlined refinance and would require an appraisal.
If you have enough home equity, you may not need to do a streamline or Home Affordable refinance. But it's nice to know your options! If I can help you review your mortgage scenario, for a refinance or purchase, on a home located in Washington state, or if you would like your personal rate quote, please contact me!