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.

Filed Under: Refinance Tagged With: , , , ,

Mortgage update for the week of January 7, 2013

January 7, 2013 by 2 Comments

This week may seem like a real yawn with only the initial Jobless Claims being released on Thursday, January 10, 2013.  

On Thursday we may hear from the Consumer Protection Financial Bureau’s about what defines a “qualified mortgage” (QM). From Bloomberg:

The qualified mortgage rule, mandated by Congress as part of the 2010 Dodd-Frank Act, is aimed at tightening lax underwriting that fueled the housing bubble. The regulations aim to protect consumers from mortgages they cannot afford by requiring lenders to take steps such as verifying income and assets. In return, lenders gain some protection from lawsuits.

Although having a “qualified mortgage” may sound like a does of common sense, we won’t know what we are dealing with until we learn about what constitutes a “qualified mortgage”. For example, currently an industry standard for a debt-to-income ratio is 45%, should the government decide that a DTI of 43% is required in order to be deemed a “qualified mortgage”, many Americans will find themselves not able to obtain a mortgage OR possibly paying a higher rate or fee for a “non-qualified” mortgage. I’m anxiously awaiting Thursday’s news from the CFPB.

If you are interested in refinancing or buying a home in Bellingham, Bellevue, Bainbridge Island or anywhere in Washington, I’m happy to help you!

Filed Under: CFPB, Economy Tagged With: , ,

Reader Question: WHEN did Fannie Mae securitze my mortgage?

January 5, 2013 by 1 Comment

This question is from a comment on one of my blog post addressing HARP 2.0’s eligibility date (Home Affordable Refinance Program), which many home owners have found to be a source of frustration. In order to qualify for the HARP 2.0 program, the mortgage must have been securitized by Fannie Mae or Freddie Mac prior to June 1, 2009. Securitization takes place after the closing of the loan and is completely out of the borrowers control.

This person is being told their loan was securitized YEARS after it closed in 2003. It is possible that the lender had to wait a long period of time before being able to sell the loan to Fannie. 

I highly recommend checking Fannie Mae’s site at https://www.knowyouroptions.com/loanlookup to verify if and when your mortgage is securitized by Fannie Mae. 

Fannie Mae recently made improvements to their loan lookup site with getting rid of their terrible (sometimes comical) “bot” filter by replacing it with the borrowers last four of their social. 

You will need to enter in the information of the primary borrower from when the mortgage was obtained. The site can be picky as to your address, for example, Ave vs Avenue; so you may have to try re-submitting your information.

“Match Found” means that Fannie Mae shows they have a mortgage on this property and that it may qualify for HARP 2.0. The improved site also provides the date the loan was securitized. A “match found” response does not guarantee that someone will qualify for the HARP 2.0 refinance program.

Fannie Mae HARP 2 0
 

Back to my reader…

Should you verify with Fannie Mae’s site that your property was securitized with Fannie Mae prior to June 1, 2009, I would contact a local licensed mortgage professional to help you with your HARP 2.0 refinance.

I’m not sure what “independent site” was used to verify. Fannie Mae’s site would be the ONLY site I would use for verification of a Fannie Mae securitized mortgage.  

Should you find that your mortgage was securitized after the June 1, 2009 cut-off date, you may have to wait and see if Congress passes HARP 3.0 (aka #myrefi) which hopefully will remove the cut-off date. 

In my opinion the cut-off dates with the HARP 2.0 programs are hurtful for consumers who had no control over when their mortgage was securitized by Fannie Mae or Freddie Mac. I hope HARP 3.0 is available soon.  When and HARP 3.0 is available, I will be sharing that information here on my blog.

By the way, Freddie Mac also has a website for verifying if your mortgage was securitized by Freddie. If your conforming loan was not securitized by Fannie Mae, the next step is to try Freddie Mac’s site to look up your loan: https://ww3.freddiemac.com/corporate/   Fannie Mae has a majority of the “market share” which is why I recommend trying Fannie Mae first.

If your home is located anywhere in Washington State, I’m happy to help you with your HARP(or any) refinance.

Filed Under: HARP - Home Affordable Refi Tagged With: ,

Mortgage rates could rise earlier than expected

January 4, 2013 by 1 Comment

Yesterday the minutes to the December 13, 2012 FOMC Meeting were released catching many off guard revealing the Fed may pull back on the purchase of mortgage backed securities earlier than originally planned.

Here are some bits from the minutes related to mortgage rates:

“While almost all members thought that the asset purchase program begun in September had been effective and supportive of growth, they also generally saw that the benefits of ongoing purchases were uncertain and that the potential costs could rise as the size of the balance sheet increased…

Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet.”

Noting that “several others” of the FOMC are considering to pull back or stop buying mortgage backed securities prior to the end of 2013 caused a major sell off in the bond markets yesterday following the release of the minutes.

Mortgage rates have been at artificially low rates largely due to the Fed’s participation in buying mortgage backed securities (MBS). Should the Fed cease purchasing MBS and treasury securities, many anticipate that “real” mortgage rates would be closer to what we see in the jumbo or non-conforming markets. Currently jumbo rates are at least full point  in rate higher than conforming mortgage rates based on a 30 year fixed.

 

If you have been considering buying or refinancing your home and benefiting from today’s low rates, I recommend doing so soon.

If your home is located anywhere in Washington state, where I am licensed to originate mortgages, I am happy to help you! Click here for a mortgage rate quote.

Filed Under: Interest Rates, The Fed - FOMC Tagged With: , ,

Mortgage Insurance Tax Deduction extended through 2013

January 3, 2013 by 23 Comments

With the recent passage of the American Tax Payer Relief Act of 2012, Congress extended the ability to deduct mortgage insurance the same as qualified residence mortgage interest. This applies to homes with private mortgage insurance, FHA mortgage insurance (upfront and monthly) as well as VA and USDA funding fees.

A qualified home, as described by the IRS, is your primary residence or your second home. You cannot collect rent on your second home or it’s…. (are you ready for this?) an investment property and not eligible for this deduction. 

This benefit is phased out for adjusted gross incomes over $100,000. Here is a chart compliments of MGIC regarding how much one may be able to deduct based on AGI:

MI Tax Deductible

The amount of mortgage insurance paid is disclosed on the Form 1098, along with the mortgage interest that was paid during that year.

For more information, please contact your personal CPA or tax professional. I am not a CPA, I am a Licensed Mortgage Originator for homes located in Washington state.  If I can help you with your mortgage needs for your home located in anywhere in Washington, including Seattle, Sequim or Snoqualime, please contact me.

Filed Under: Mortgage Insurance Tagged With: , , ,

Reader Question: Do I Qualify for a VA Loan?

January 3, 2013 by 4 Comments

I received this question on a comment and thought I’d share my response via a post.

Happy New Year,
I am contemplating a return to the Tri Cities and would like to utilize my VA 0 down loan in the amount of $250,000 or less. My income is based of a civil service pension, social security and VA disability.  The total gross amount I currently receive is $4,400 monthly.   Am i going to be able to qualify for the VA  (or any other)loan?

Thanks in advance,
Greg

VA’s standard guidelines allow for a debt to income ratio of 41%.  This means that Greg’s total monthly mortgage payment and monthly debts should not exceed 41%. 

41% of $4400 is $1804. VA guidelines would probably allow $1804 for total proposed mortgage payment and monthly debts.

The current mortgage payment for a $250,000 zero down VA purchase would be roughly $1422 (including taxes estimated at $260.50 and insurance at $50 per month).  

This is based on rates as of 3:00 pm on January 3, 2012 of 3.250% (apr 3.430) for a 30 year fixed VA loan based on credit scores of 720 or higher. 

The proposed mortgage payment of $1422 less the $1804 allowed monthly debt (for the 41% debt to income ratio) leaves around $382 per month for other possible monthly debts (car loans, student loans,  credit cards, child support, etc.).

So if Greg has less than $382 per month in other debts, he would qualify for a $250,000 home (also assuming taxes and insurance are around what I’ve estimated).

BUT WAIT… there’s more…

If Greg’s social security income may be able to be grossed up by 15%, which would allow him to have a little more “wiggle room” with the amount of monthly debt.

In addition, if he is a disabled veteran, he may qualify to be exempt from the VA funding fee which would  also reduce his payment by about $23.00 (apr 3.261).  This would allow for $400 in monthly debt (not including if the social security income is able to be grossed up) with Greg qualifying for a $250,000 home in the Tri Cities.

If you are interested in applying for a VA, FHA or conventional loan for a home anywhere in Washington state, please click here.

Filed Under: VA Mortgage Loans Tagged With: , , , , ,

Happy New Year! Is your Loan Officer Legal?

January 1, 2013 by 2 Comments

Mortgage originators (also referred to as Loan Officers or MLOs) are required to be licensed with the NMLS unless they work for a depository bank or credit union, in which case they are only required to be “registered” (per the SAFE Act).

[Read more…]

Filed Under: Legislation Tagged With: , , , , , ,

Mortgage rate update for the week of December 31, 2012

December 31, 2012 by Leave a Comment

Happy last day of 2012! Although this is a short week due to the New Year holiday, it’s packed with economic data that may impact mortgage rates, including The Jobs Report on Friday. Here are a few of the scheduled events for this week:

Monday, December 31, 2012: Last day for Congress to avoid the “fiscal cliff”.

Tuesday, January 1, 2013: HAPPY NEW YEAR! 

Wednesday, January 2, 2013: ISM Index and FOMC Minutes

Thursday, January 3, 2013: ADP National Employment Report

Friday, January 4, 2013: The Jobs Report

Just a quick reminder, I am on a short vacation and will be returning to work on January 3, 2013.

PS: Go HAWKS!!

Filed Under: Economy, Interest Rates Tagged With: , , ,
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