If there can be one positive tidbit from the government shutdown, it just may be lower mortgage rates. And by the way, we are still originating and closing mortgages during the government shut down. USDA has been reduced to essential functions only and therefore, loans that have not yet been approved USDA may not be closing during this time. However, conventional, FHA and VA loans are available. Not all lenders are able to operate during the shutdown because of not being able to obtain tax transcripts from the IRS, so please do confirm with your lender whether or not this is an issue for your mortgage scenario. Self employed borrowers may find it more challenging during these times.
A problem the mortgage industry has (one of them) is the perception that consumers have about the mortgage process.
- Reduced document loans are pretty much gone unless you want to go “hard money”. Even a “streamlined” FHA refinance is not very streamlined – it’s a “full doc” loan minus the appraisal.
- The lender offering the lowest rate does not mean your loan will close or close smoothly.
- Borrowers need to pay more attention to the knowledge, expertise and professionalism of the loan officer. This is at least equally as important as trying to find the “lowest mortgage rate” [Read more...]
If you have been waiting for Congress to pass HARP 3.0 or have been previously turned down for a refinance because of lost equity in your home, you might consider trying to refinance again.
I’m reviewing a scenario for one of my returning clients who currently have a 15 year fixed mortgage at 3.250% from when they purchased their Seattle home 1.5 years ago. The current balance is around $387,600 with a principal and interest payment of $2930.13. They do not have taxes and insurance included in their mortgage payments. My clients are considering another 15 year fixed mortgage or possibly a 10 year fixed mortgage.
Quotes below are with impounds waived (lenders typically charge 0.25% in fee when taxes and insurance are paid by the borrower instead of included in the monthly mortgage payment). Rates are based on mid-credit scores of 740 or higher and a loan to value of 80% or lower. Mortgage rates are as of January 8, 2013 and may (and will) change at any time.
2.875% for a 15 year fixed (apr 2.979) has a rebate credit which brings the estimated net closing cost down to $1229 based on a loan amount of $389,000. The principal and interest payment is $2663.04 reducing their monthly mortgage payment by $267.09.
2.750% for a 15 year fixed (apr 2.886) has closing cost estimated at $4195. The principal and interest payment is $2660.20 with a loan amount of $392,000. This scenario reduces their payment only slightly more to $269.93. If it were my choice, I’d opt for the slightly higher rate with lower closing cost.
Currently, the 10 year fixed rate for this scenario is actually priced slightly higher than the 15 year fixed.
2.875% for the 10 year fixed (apr 3.020) with $1700 in net closing cost after rebate credit. The principal and interest payment would be $3,733.81 based on a loan amount of $389,000.
Again, I would opt for the 15 year at 2.875% as the pricing is slightly better and I could always make the additional principal payment of $1070.77 (3733.81 less 2663.04) in order to pay down my mortgage in 10 years vs 15.
If you are interested in refinancing or buying a home located anywhere in Washington state, please contact me.
The WSJ reports that the Obama Administration is “eyeing” a refi program that would allow underwater home owners who currently do not qualify for HARP 2.0 to refinance their homes. Currently in order to qualify for the Home Affordable Refinance Program (aka HARP 2.0) the existing mortgage must be securitized by Fannie Mae or Freddie Mac and the “securization” must have taken place prior to June 1, 2009.
According to the article, White House officials and the Treasury would like to include mortgages that were not securitized by Fannie Mae or Freddie Mac. This program would possibly include non-conventional, “alt-a”, subprime and mortgages held by private lenders. There is no mention of expanding or removing the securitization date requirement in WSJ’s article, which many homeowners are desperately hoping for (also known as HARP 3.0).
In order for these expanded refi programs to be a reality, using Fannie Mae or Freddie Mac, Congress and the FHFA must approve them. When and IF this happens, I’ll be sure to announce that here at Mortgage Porter.
With the re-election of President Obama, in my opinion, the odds of HARP 3.0 becoming a reality improved. HARP is an acronym for the Home Affordable Refinance Program. HARP was created to help home owners who would qualify to take advantage of today’s extremely low mortgage rates and refinance except their homes have lost equity. HARP is available for mortgages that were securitized by Fannie Mae or Freddie Mac prior to June 1, 2009. We are currently on version “HARP 2.0″ which was offered expanded guidelines from when HARP first rolled out. For more information about HARP 2.0, click here.
At the beginning of this year, HARP 2.0 was expanded in phases to make the program more available for employed and credit worthy home owners. Fannie Mae and Freddie Mac reduced the requirement for appraisals and made efforts to make the program more for banks and lenders to offer. However, many banks and lenders have not fully adopted HARP 2.0 guidelines as created by Fannie Mae and Freddie Mac. Some will only offer HARP 2.0 home owners who currently have their mortgage serviced by that bank (where they make their mortgage to). And some lenders have limited what types of HARP 2.0 loans they will accept, for example, refusing to offer HARP 2.0 on loans that have existing private mortgage insurance or LPMI. Or by adding overlays to loans they will accept with limits to loan to value or not accept Fannie Mae or Freddie Mac appraisal waivers. Some wholesale lenders are offering HARP 2.0, however, the demand is so great for these borrowers that it’s not unusual for HARP 2.0 refi’s to take several months to close. In fact a couple of the these wholesale lenders who were accepting HARP 2.0′s with higher loan to values or pmi have either stopped accepting applications until they can catch up with what they currently have in process.
President Obama and members of Congress have been pushing for a refinance program that would go beyond HARP 2.0. This program has been nick-named HARP 3.0 and has been assigned a hashtag of #MyRefi by the White House.
It is anticipated that HARP 3.0 will have many of the same features available with HARP 2.0 along with:
- expanding or eliminating the Fannie Mae/Freddie Mac securitization cut-off date of May 31, 2009;
- open to mortgages that are not securitized by Fannie Mae or Freddie Mac, including qualified borrowers who used jumbo, subprime or other alternative programs.
- allow borrowers who have refinanced under earlier versions of HARP to refinance again;
- expand loan amounts to previous conforming high balance limits. Borrowers in the greater Seattle area with loan amounts at the previous conforming high balance limit of $567,500 may qualify for HARP 2.0, however, they often need to bring in cash to close with the current King County loan limit set at $506,000.
President Obama’s refi plan would probably look more like an FHA refinance and would be available to home owners who have lost equity in their home and have made their mortgage payments on time for the last six months. President Obama has been pushing for programs to become more available to home owners so they they can take advantage of today’s lower rates and help our economy.
When and if HARP 3.0 #MyRefi becomes available to Washington home owners, I will be sure to announce it here! To stay informed, you can subscribe to my blog, follow me on Twitter or “like” me on Facebook. For a mortgage rate quote or to start a loan application for a refi on your home located any where in Washington state, where I’m licensed, please click one of the links above.
About three years ago, I helped a couple buy their first home. They were my first clients to lock in at 4.500%. I remember sitting across the table from them at a coffee shop in West Seattle and telling them that they would probably never need my services again since their rate was so low. I was wrong.
We are refinancing their mortgage of $359,000 into another 30 year fixed rate at 3.375% (apr 3.544) with net closing cost of $1145. They are reducing their monthly mortgage payment by $418! That’s a significant amount of savings to put back into their household to pay off revolving debt, build savings or retirement or help fund a college account.
They could even take that $418 and apply it towards additional principal, making the same payment they have been for the past three years while whittling seven years off of their new mortgage. This would save them $67,000 over the life of the loan.
My point is that mortgage rates are extremely low. Even if your current rate is 4.5%, it may very well make sense to refinance.
If your home is located in Washington state and you would like me to provide you with a written rate quote, click here.