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.
Should I refi my 15 year fixed mortgage if my rate is 3.250%?
January 8, 2013 by Leave a Comment
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.
Obama Administration considering new Refi Program #MyRefi
December 26, 2012 by 1 Comment
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.
Stay tuned! Subscribe in the upper right corner of this blog or follow me on Facebook or Twitter.
President Obama and HARP 3.0 aka #MyRefi
November 7, 2012 by 5 Comments
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.
Give yourself a raise: Refinance!
October 12, 2012 by Leave a Comment
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.
Is it time for you to refi?
September 28, 2012 by Leave a Comment
Mortgage rates have been at historic lows for quite some time largely due to the Fed’s purchase of mortgage backed securities. Although the Fed is involved with keep rates at artificial lows, mortgage rates are also influenced by other actions. For example, yesterday we saw some volatility partially caused by bond traders taking profit. The Fed has indicated they will continue the purchase of mortgage backed securities for an extended period of time. So when is it the right time for you to refinance and lock in a rate?
Locking in a mortgage rate means that you have secured a certain rate at a certain cost (or credit) for a specific amount of days. It’s a “rate lock commitment” for the mortgage originator to deliver that loan to the lender. When you have locked in a mortgage rate, assuming the transaction closes in time, you are assured that you have that rate for that time period. If you wind up needing additional time, you may be able to extend the rate lock commitment for a specific period. Although locking at the begin of a transaction provides you peace of mind that you have that low rate; the risk is that rates may improve.
You can also start the refinance process and “float”. This means that you start your loan application and the entire process until you decide to lock in your interest rate. You don’t have to lock in your rate until about 10 days before you closing. With floating your rate, you’re risking rates may deteriorate before you’re able to lock.
In my opinion, rates are at such low levels, it makes sense to lock now. However, if you’re someone who will be disappointed if rates improve by 0.125% and you don’t mind the risk of a higher rate, floating may be better for you.
Should you refinance? You may want to consider refinancing if:
- Your current mortgage rate is in the mid-4s or higher and if you have a conforming loan amount, which in the Seattle area is a loan amount of $506,000 or lower. NOTE: some of my clients are doing “cash in” refinances to bring their loan amount down to $506,000.
- If your loan amount is over $506,000 and under $567,500 in King, Pierce or Snohomish county and your loan to value is around 95%, you may want to consider an FHA jumbo mortgage.
- If you are eligible for a HARP 2.0 refinance. Click here to learn more.
- If you currently have an FHA insured mortgage, you may be eligible for an FHA streamlined refinance. No appraisal is required with an FHA streamlined refi.
- If you are considering shortening your mortgage term.
- If you currently have an adjustable rate mortgage and wish to have a fixed rate mortgage.
- Create more cash flow for your investment property by reducing the rate. NOTE: Investment property may qualify for HARP 2 or FHA streamlined refi’s
If your home is located anywhere in Washington state, I’m happy to review your scenario for you to see if it makes sense to refinance now. Click here if you would like me to provide you with a rate quote for your home located in Washington.
Fannie Mae and Freddie Mac improve HARP 2.0 Underwriting Guidelines
September 18, 2012 by 2 Comments
On Friday, Fannie Mae and Freddie Mac announced much needed updates to underwriting guidelines for HARP 2.0. The Home Affordable Refinance Program (HARP 2.0) has helped many Washington state homeowners with conforming mortgages (securitized by Fannie Mae or Freddie Mac prior to June 1, 2009) take advantage of historically low mortgage rates regardless of their home’s current equity (or lack thereof). You can learn more about the HARP 2.0 program by clicking here.
The recent updates to HARP 2.0 will allow more home owners to have access to this program by reducing documentation requirements for some borrowers. Here are some of the improvements:
- Reduced documentation for income and assets. NOTE: Form 4506 and verification of employment will still be required. Lenders will not be required to verify large deposits.
- Allowing borrowers with assets to not have to document income. This is available when a home owner has at least 12 months of their proposed new mortgage payment (PITI) in savings. The assets may come from checking or savings, stocks or vested retirement accounts.
- Improvements to when a borrower is removed from the mortgage. Previously if a borrower was being removed with the HARP 2.0 refinance, guidelines required proof that the remaining borrower made the mortgage payments for the last year with their own separate funds (except in the case of death). Now with HARP 2.0, in the remaining borrower can qualify on their own (debt to income at 45% or lower and credit scores of 620 or higher) they may qualify for a HARP 2.0 refinance.
Remember, banks and lenders may layer their own underwriting guidelines to Fannie Mae and Freddie Mac’s HARP 2.0 program.
If you have been turned down for a HARP 2.0 refinance before, it may be worth checking with your local, licensed mortgage originator to see if you are now eligible. HARP 2.0 is available for owner occupied, vacation homes and investment properties. I can help you if your home is located anywhere in Washington State – click here for your HARP 2.0 rate quote.
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