HARP 2.0 Update

March 20, 2012 by Leave a Comment

Last weekend, Fannie Mae and Freddie Mac updated their automated underwriting systems (AUS) respectively known as DU and LP to allow expanded loan to values and other improvements to their guidelines.  Many Washington home owners have been anxiously waiting (along with mortgage originators, like yours truly) for the expanded guidelines to be available. 

It appears that HARP 2.0 has hiccups.  Expanded guidelines are not being fully released to mortgage originators. Banks continue to have their overlays for Fannie Mae DU Plus and Freddie Mac Relief Open Assess HARP refinances, restricting what other lenders can do to help home owners. This is especially frustrating when banks/lenders are reportedly outsourcing many of their clients to large internet lenders with mostly inexperienced mortgage originators. Why these large banks would treat some of their clients as a "cold lead" instead of allowing consumers to have access to all lenders leaves me scratching my head.

I am constantly checking with the lenders I work with to see what's new with HARP guidelines.  If you're reading this post, keep in mind that mortgage underwriting guidelines change constantly – what is published here, depending on when you read it, may be outdated. To stay updated, please subscribe to my blog (upper right corner). I'm also continuing to update my HARP 2.0 guide (button to the left).

Here's what I know, effective as of today, March 20, 2012 as of 8:30 am:

  • HARP is allowing for more waived appraisals on both Fannie and Freddie programs.  
  • Waived appraisals may be available to 1-unit primary residence, investment property or second homes. It's not available to 2-4 unit properties.  NOTE: not every home owner will qualify to have their appraisal waived.
  • Currently, the banks I work with are limiting the LTV to 105% for the first mortgage. There are no LTV limits with second mortgages/HELOCs, however the second lien holder needs to agree to be subordinated or be paid off – it cannot be included in the new HARP refi.
  • Private mortgage insurance: bank overlays (restrictions) are allowing us to go up to 95% LTV with a few allowing up to 105% LTV.  
  • Some private mortgage insurance companies are more agreeable than others with HARP refi's.  If your existing pmi is with UGIC, your HARP refi may take months. 

I'm hopeful that banks will pick up the pace and update their overlays so that HARP is more widely available to home owners while mortgage rates are still low.  I am told by the banks we work with that updated guidelines are coming soon.

I will continue to keep you posted! 

If you would like me to provide you with a HARP 2.0 refi quote for your home located in Washington, click here.

2:30 pm UPDATE: I'm already hearing that some of the banks we work with will begin releasing HARP to us possibly later this week.  Stay tuned!

Filed Under: HARP - Home Affordable Refi

HARPy St Patty’s Day

March 17, 2012 by Leave a Comment

image from www.mortgageporter.com

I’ve been checking Fannie Mae’s website for the much anticipated release of the expanded HARP guidelines (often referred to as HARP 2) which is scheduled to take place this weekend.

Click here for your HARP 2 rate quote for your home located anywhere in Washington.

Once the guidelines are released, I will review them and plan on posting them here on my blog to share with Washington homeowners hoping to refinance and my readers. Many home owners have put their HARP refi’s “on hold” waiting for the expanded guidelines which will allow more home owners who have lost home equity to refinance their conventional mortgages (if securitized by Fannie or Freddie prior to June 1, 2009).

We don’t know what the bank or lender guidelines (underwriting over-lays) will be. Some major banks have already pawned off some of their clients to large internet lenders who tend to have very inexperienced mortgage originators.

We do know there is significant pent-up demand for HARP 2’s expanded guidelines because of the delay in releasing this until this weekend. Home owners planning on refinancing should be well prepared and patient. The release of HARP 2 this weekend combined with the increase in FHA mortgage insurance premiums taking place on April 9, 2012 will cause many Washington home owners with both conventional and FHA underlying mortgages to want to refinance.

I will keep you posted as soon as I have any information.

Happy St. Patty’s Day

Filed Under: HARP - Home Affordable Refi, Refinance

Should I pay off my car before buying a house?

March 15, 2012 by Leave a Comment

Of course I have to start this post off by saying, everyones financial scenario is different and before taking any actions – please consult with your local licensed mortgage originator. 

It seems logical that paying off a car might help someone qualify for more home. Did you know it may have negative impacts on getting preapproved for a mortgage?

First of all, paying off a car loan reduces the amount of funds available for possible down payment or any reserves (savings after closing) that may be required.  

When you pay off the car, that old credit tradeline is also closed. Credit scoring modules favor older established debts with good payment history. Once you pay off and close that car loan, believe or not, your credit scores will most likely go down.  

As far as your debt to income ratios are concerned, many program guidelines will not count installment debts when there are less than 10 months of payments remaining on the term of the loan.  Assuming you have enough funds for down payment and reserves, you could possibly pay down (instead of paying off) your car loan to have only 8 payments remaining on your term.  This may cause you to not have the car payment considered in your DTI ratios for qualifying for a mortgage.

****WARNING**** PLEASE talk to your mortgage originator before you take any significant actions with your debts or assets if you are considering buying a home. There may be other stragegies you should be considering for your home buying goals.

If you're considering buying a home located anywhere in Washington, I am happy to help you!  I've been originating mortgages at Mortgage Master Service Corporation since April 2000.  Simply click on the quote or apply link at the top of this page.

Filed Under: Underwriting and Qualifying

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

March 13, 2012 by Leave a Comment

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.

[Read more…]

Filed Under: Economy, Interest Rates

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

March 9, 2012 by 2 Comments

 

FHAStreamlined

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%.  

UPDATE APRIL 11, 2012: WE ARE ACCEPTING APPLICATIONS FOR FHA STREAMLINED REFI'S with reduced mortgage insurance – you DO NOT NEED TO WAIT UNTIL JUNE 11, 2012 TO REFI! 

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.

 

Filed Under: FHA, Mortgage Insurance, Refinance

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

March 8, 2012 by Leave a Comment

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.

Filed Under: FHA, Mortgage Insurance, Residential Purchase Tagged With: ,

HUD issues Mortgagee Letter Conforming Changes to Mortgage Insurance Premiums

March 6, 2012 by Leave a Comment

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. 

 FHAAnnualMIP

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


Filed Under: FHA, Mortgage Insurance

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

March 6, 2012 by 1 Comment

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.

UPDATE 3/6/2012: INFORMATION ON HUD'S MORTGAGEE LETTER. 

Filed Under: FHA, Mortgage Insurance Tagged With: , ,
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