Archives for March 2012

Mortgage Rate Movers for the Week of March 12, 2012 and the FOMC Rate Decision

Mortgage rates are based on mortgage backed securities (bonds) and may change throughout out the day. Investors will seek the safety of bonds when stock markets are deteriorating.  The reverse is true: good news for the economy (as well as inflation) tend to cause mortgage rates to rise.

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Considering refinancing your FHA mortgage? Here’s what you need to know NOW



HUD announced dramatic changes to their mortgage insurance premiums this week. If you have been considering refinancing your existing FHA mortgage by doing an FHA streamlined, you need to be aware of a couple of dates and which should cause you to either take action now or wait for your refi. 


HUD has finally decided to reduce the mortgage insurance premiums on FHA streamlined refinances.  HOWEVER it only applies to exisiting FHA loans that were endorsed prior to June 1, 2009.  When your loan was "endorsed" is completely different than when your loan closed.  HUD may take several weeks to a couple months after closing to endorse (insure) an FHA mortgage.  You could have closed in April of 2009 and not have your mortgage endorsed by HUD until after June 2009 and therefore not qualify for the reduced mortgage insurance rates.


If you closed the FHA mortgage you want to streamline refinance prior to May 31, 2009, contact your local mortgage originator to see when your mortgage was endorsed by HUD.  If your home is located anywhere in Washington State, I'm happy to help you with your FHA refinance and determining your endorsement date. (Currently HUD does not have a way for consumers to access this information that I'm aware of).  IF your mortgage was endorsed by HUD prior to June 1, 2009, you may want to consider delaying your FHA streamlined refinance for a few weeks until June 11, 2012.  Mortgage insurance premiums will be dropped, for those who qualify based on the endorsement date, to 0.01% for the upfront funding fee and the annual fee will be cut in half to 0.55%.  


If your existing FHA insured mortgage was endorsed (or closed) after May 31, 2009, you will want to consider an FHA streamline refinance NOW as mortgage insurance premiums are going up. Remember, it's possible that your loan may have closed weeks before May 31, 2009 and NOT be endorsed by HUD until after the cut-off.  Effective on Case Numbers (this is different than your loan application and may take place after your loan application) issued April 9, 2012 and later, mortgage insurance premiums are going up.  The upfront premium will be 1.75% and monthly is increasing 0.10 for annual mi premiums. In early June, high balance FHA loans (loan amounts $417,001 to $567,500 in the greater Seattle area) will go up an additonal 0.25% for annual mi premiums.


Bottom line:  
  • If you closed your FHA loan prior to 2009 with your existing FHA loan, it's probably safe to assume your loan was endorsed by HUD in time to receive reduced MI rates and you may want to WAIT.  
  • If you closed your FHA mortgage from early 2009 to May 2009, you may need to check with your mortgage originator to see when your loan was endorsed.
  • If you closed your FHA mortgage from June 2009 or later, odds are you do not qualify for the reduced rate and, if you don't act quickly (March is your last month) to start your FHA streamlined refinance, the higher mortgage insurance rates could make it so that it's no longer worth while to refinance despite current low rates. REFI NOW if you are interested.


Don't delay – check out your options now!  Remember, FHA streamlined refinances do not require an appraisal – it does not matter what the current value of your home currently is.


As I mentioned, I am happy to help you with your mortgage needs with homes located anywhere in Washington, where I'm licesned to originate mortgages.


Preapproved with FHA Financing? You Better Double Check with your Lender.

If you are currently preapproved to buy a home using FHA for your financing, I highly recommend you check with your mortgage originator to make sure your preapproval is still valid.  

Why the worry?  FHA will have higher mortgage insurance rates effective with new loans (case numbers issued as of) April 9, 2012.  How much somebody is preapproved for is based on their debt to income ratios, which includes the proposed new mortgage payment.

Based on the scenarios I used on my post announcing these changes, a loan amount of $417,000 would see an increase in payment of $48.95.  For a borrower who’s currently maxed out on their debt to income ratios (DTI), this could reduce their borrowing power by about $10,500.  FHA “jumbo” borrowers are hit extra hard with FHA’s additonal tax fee, my previous post for a loan amount based on the Seattle FHA loan limit of $567,500 has an increase in payment of $183.85. For the borrower pushing their DTI, $183.85 increase in monthly payment pencils out to $39,700 in less home someone will qualify for.

Even if your preapproval letter states it’s valid until a certain date beyond April 9, 2012, it is subject to “changing market conditions”. Your scenario is not “locked in” or approved until you have a signed around contract that you’ve submitted to your lender to complete your loan application. Changing mortgage rates and property taxes also impact how much you qualify for.

Your mortgage originator can (and should) review your current preapproved scenario and plug in the mortgage insurance rates to determine how much your payment will be going up and to see if it impacts how much you’re preapproved for. 

If you are considering buying or refinancing a home anywhere in Washington State, I’m happy to help you! Please click the links at the top of this page for a rate quote or to apply.

PS: This also impacts home owners who are considering refinancing from a non-FHA loan to an FHA or who are doing a credit qualifying (full doc) FHA streamlined refinance.

HUD issues Mortgagee Letter Conforming Changes to Mortgage Insurance Premiums

Hot off the press!  HUD just released Mortgagee Letter 12-4 addressing all of the changes to FHA mortgage insurance premiums. *Unless your doing an FHA streamlined refinanced of a mortgage that was "endorsed" on or before May 31, 2009; your FHA mortgage insurance premiums are going up. 

Upfront mortgage insurance premium increasing effective April 9, 2012. Currently the rate is 1% of the loan amount. Effective with case numbers issued April 9, 2012 and later, the premium will increase to 1.75%.

Increase to annual mortgage insurance premiums go into effect April 9, 2012. This increase is due to the Temporary Payroll Tax Continuation Act of 2011.  NOTE: if you have a 15 year amortized FHA mortgage with a 78% loan to value, there is no annual mortgage insurance premiums. 


FHA's annual mortgage insurance is paid monthly. The bps is multiplied by the FHA base loan amount to determine the premium and then divided by 12 months.  A $100,000 loan with a loan to value over 95% would have an annual MIP of $1200. Divide this by 12 and the monthly premium is $100.

High Balance FHA annual mortgage insurance premiums will increase an additional 25 bps with case numbers assigned on or after June 11, 2012.  In the greater Seattle area, this will impact FHA loan amounts of $417,001 to $567,500.  If you have a higher FHA loan amount originated on or after June 11, 2012, add an additional 25 bps to the figures in the table above.

The above increases will impact all newly originated FHA mortgages for purchase and refinances, unless the home owner qualifies for the new reduced mortgage insurance rates with an FHA streamlined refi. The changes to mortgage insurance do not apply to FHA's reverse mortgages.  Keep reading…

FHA Streamlined Refinances will have reduced FHA mortgage insurance premiums IF the FHA loan being refinanced was *endorsed on or before May 31, 2009 effective on case numbers issued on or after June 11, 2012.  Upfront mortgage insurance premiums will be reduced from 1% to 0.01% of the base loan amount and the annual mortgage insurance will be reduced to 0.55% of the loan amount. Borrowers must be current on their existing FHA insured mortgage.

If your FHA loan being refinanced was endorsed June 1, 2009 or later, then the reduced rate does not apply. Your FHA mortgage insurance rates will be increasing based on the information above effective April 12, 2012.

NOTE: *Endorsed means when FHA actually insures the mortgage. This often happens months after closing! 

If I can help you with your FHA refinance or purchase for your home located anywhere in Washington, please contact me.

Related post:

FHA Mortgage Insurance to increase April 2012

FHA to reduce mortgage insurance premiums for some FHA streamlined refi's

FHA to Reduce Mortgage Insurance Rates for some FHA Streamlined Refi’s

Today HUD announced that beginning June 11, 2012, FHA will REDUCE the cost for an FHA streamlined refinance for FHA insured mortgages that were originated prior to June 1, 2009. A mortgagee letter will follow to make the following changes official:

Upfront mortgage insurance (UFMIP) will be reduced to 0.01% (from 1.00%).

Annual mortgage insurance (typically paid monthly) will be reduced to 0.55% (cut in half from 1.10%).

This is great news to those who originated their FHA loans prior to June 1, 2009. Once I receive the mortgagee letter from HUD, I'll be sure to update you.  We'll need clarification on how HUD defines "origination".  UPDATE:  FHA's Mortgagee Letter clarifies that loans must be "endorsed" by HUD prior to June 1, 2009.  This is different than your closing date and typically takes place weeks after closing.

FHA streamlined mortgages are popular right now considering today's low mortgage rates and that they do not require an appraisal. 

Currently, a Seattle area home owner doing an FHA streamlined refinance with a loan amount of $400,000 and credit scores of 720 or higher would have a rate of 3.750% (apr 4.449) with a principal, interest and mortgage insurance (PIMI) payment of $2,234.59.  With the proposed reduced FHA mortgage insurance, assuming the home owner originated their FHA loan prior to June 1, 2009, their PIMI payment would be $2,034.45 (apr 4.071): a difference of $200 per month!

If you would like more information about refinancing your FHA insured mortgage for your home located anywhere in Washington, please contact me.  I have been originating FHA insured mortgages for Washington home owners since April 2000 at Mortgage Master Service Corporation and I'm happy to help you.


What May Move Mortgage Rates the week of March 5, 2012

mortgageporter-economyThis week ends with probably one of the most important scheduled economic indicators: The Jobs Report. Not only does the Jobs Report reveal whether or not more Americans are going back to work, it also indicates signs of inflation (wage inflation). Both good news and inflation may cause mortgage rates to trend higher. Numbers that are weaker than expected may cause rates to improve. This is because mortgage rates are based on mortgage backed securities (bonds) and investors will either seek the safety of bonds or possible improved returned with stocks depending on data.

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Big Banks and Lenders preparing for HARP 2

Yesterday I read that a huge internet lender is hiring thousands of loan originators to prepare for the volumes of business they're anticipating in two weeks once expanded guidelines of the Home Affordable Refi Program (aka HARP 2) are released by Fannie and Freddie over St. Patty's weekend.

I'm also hearing that some of the big banks are planning on using these internet companies to handle their volumes of mortgages they currently service. 

You do not have to return to who you make your mortgage payment to for your HARP 2 refinance.  If your home is located in Renton, Woodinville, Seattle, Samammish or anywhere in Washington state, I can probably help you with your HARP refinance. 

Click here for your HARP 2 refinance quote for your home (primary residence, investment or vacation property) located in Washington.

Mortgage rates and closing cost are not the only things you should be considering when you select your lender for your HARP refinance. I highly recommend that you research your mortgage originator.  Thanks to the NMLS, you can quickly enter your mortgage originators name, company name or license number and get a snapshot of their employment history.  Many of the LO's being hired by the online mortgage companies are inexperienced and may have closed few (if any) mortgage transactions before. They just know how to pass the LO exam to be licensed and how to fill in the blanks on a loan application.  "Filling in the blanks" is vastly different than completing a loan application and knowing which questions to ask from your client in order to assure a smooth closing.

Was your mortgage originator flipping burgers last month or closing loans? Click here to learn more about your mortgage originator: NMLS Consumer Access.  In addition to verifying your mortgage originator on NMLS, you can also try "googling" their name to learn more about them. A slightly lower rate quote (or any lower rate quote) doesn't mean anything if that mortgage originator is not capable of closing your loan.

Regardless of where home owners go for their refinance, they'll need to be a little more patient. It's my understanding that some banks are informing their clients they are taking up to 90 days to close refinances.  

We are expecting increased volumes at Mortgage Master Service Corporation too. Every mortgage company and bank should be. Our office is family owned and operated with our main office located in Kent, Washington. A majority (I'm guessing 90% or more) of our transactions are processed and underwritten at our main office. We also prepare your loan documents and fund your loan from our credit lines. Many of large banks or lenders don't have local processing or underwriting; they're often located outside of Washington. I have been working with my team at Mortgage Master Service Corporation for just shy of 12 years.  

I would love to be your mortgage originator for your refinance (or purchase!) for home located in Washington.