Paying Alimony? You May Want to Consider an FHA Insured Mortgage

July 15, 2010 by 3 Comments

UPDATE: You no longer have to FHA if you’re paying alimony... Fannie Mae and Freddie Mac have updated their guidelines. Check it out here!

Most mortgage originators know that if you have less than 10 payments remaining with alimony or child support payments, it may not have to be factored into your qualifying ratios (debt to income) as long as the payment doesn’t impact your ability to pay the mortgage following closing.  A borrower needs to be well qualified with plenty of savings for an underwriter to support this guideline. [Read more…]

Filed Under: FHA, Underwriting and Qualifying Tagged With: , , , ,

Seafair Pirates invade Alki Beach in West Seattle

July 10, 2010 by Leave a Comment

My photos of the Seafair pirates landing at Alki are posted here.

Filed Under: Seattle

Mortgage Master Service Corporation is closed for the holiday

July 5, 2010 by Leave a Comment

Mortgage Master Service Corporation is  closed today in observance of Independence Day.  Our main office in Kent will reopen for business as usual on the morning of Tuesday, July 6, 2010.

The markets are closed today too so I won't be posting mortgage rates today.

Filed Under: Current Affairs

Happy Independence Day

July 4, 2010 by Leave a Comment

One thing I loved about living on North Lake in the West Hill area of Auburn (boarderline Federal Way) is the neighborhood parade they would do on the Fourth of July.

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Mortgage Master Service Corporation will be closed tomorrow in observance of this American holiday and will reopen for business as usual on Tuesday, July 6, 2010.

I hope you have a wonderful, safe and sane Independence Day.

Filed Under: Current Affairs, Just for Fun

Pricing a Home Affordable Refinance

July 1, 2010 by 1 Comment

Home Affordable Refinances allow home owners with conventional mortgages (Fannie Mae or Freddie Mac) who have had their homes depreciate refinance at competitive market rates.  

Factors that impact the mortgage interest rate are:

  • loan to value (new loan amount divided by the appraised value)
  • the lowest middle credit score of all borrowers on the loan
  • lock period and loan loan amount

A Seattle couple who purchased their home in 2005 for $400,000 with a 20% down payment with an interest only mortgage still has a loan balance of $320,000 if they have not made any additional payments towards principal.  This couple has excellent credit and is interested in refinancing but the big mystery is how much the home will appraise for since it's based on what other homes similar to theirs have recently sold and closed for.  

They currently make their mortgage payments to Chase and their mortgage is securitized by Freddie Mac, which means they probably qualify for the Freddie's Home Affordable Refinance Program:  Relief Refinance Mortgage.  With this mortgage, the loan amount is limited to current balance plus $5,000.   In order to limit the amount of cash possibly due at closing, I often price the rate at zero points to reduce closing costs.

Here's what current rates would look like based on different appraised values using a 30 year fixed rate priced with zero points (origination or discount):

Loan to value of up to 95%:  4.500% with 0 points (apr 4.571%).  This would be the same rate if the home has a loan to value of 80% (roughly $410,000).   Based on the Seattle couple's scenario, their home would need to appraise for $340,000 or more to qualify for this rate.

Loan to value over 95% and up to 97%:  4.625% with 0 points (apr 4.697%).  The home would need to appraise for around $335,000.

Loan to value over 97% and up to 105%:  4.750% with 0 points (apr 4.823%).  The home would need to appraise for at least $310,000.

Unless it seems real obvious to me what the homes appraised value may be, I tend to lock based on the worse case "possible scenario".  Once we receive the appraisal, we can adjust the rate accordingly.   If the appraisal comes in lower than the worse case "possible scenario", the home owner does have options, including bringing in cash to closing or terminating the refinance at the cost of the appraisal deposit.

Fannie Mae and Freddie Mac's Home Affordable Refinance program is helping many Washington state homeowners reduce their mortgage payments or convert their adjustable rate or interest only mortgage into a fully amortized mortgage.   This program is available for owner occupied, vacation homes and rental/investment property. 

Filed Under: Adjustable Rate Mortgage (ARM), Fannie, Freddie and FHFA, HARP - Home Affordable Refi, Refinance

Historic Low Mortgage Rates May Help Seattle Area Homeowners

June 29, 2010 by Leave a Comment

The mortgage rates we're witnessing today can help many Washington state homeowners if they take advantage by refinancing.  Even if your home's value has declined due to your homes in your neighborhood selling for less, you may still have options thanks to the Home Affordable Refinance program (set to expire in 2011) and FHA streamline refinances. 

Many of the home owners I'm helping with refinancing are:

  • reducing their monthly mortgage and creating more monthly cash flow to help with their budgets;
  • converting adjustable rate mortgages or interest only mortgage to fixed rates;
  • shortening their mortgage terms;
  • paying off second mortgage by including them in their refinance or paying off debts.

The Home Affordable refinance(HARP) is available for conventional loans that are securitized by Fannie Mae or Freddie Mac–this is different than who you make your mortgage payment to (the bank or mortgage servicer).   The Making Home Affordable Program allows for negative home equity and may not require an appraisal.  If your current mortgage doesn't have private mortgage insurance, then the new Home Affordable refi will not have mortgage insurance either–regardless of the loan to value!  This program is available for owner occupied, rental homes and vacation homes.   NOTE:  Second mortgages cannot be paid off with this program, however they can be subordinated.

Here's an example of HARP refi quotes (as of 12:30 today) based on a loan amount of $400,000 and an appraised value of $381,000 (roughly 105% loan to value) using a 30 year fixed with mid-credit scores of 740 and priced with zero points (origination or discount):

Owner occupied:  4.750% (apr 4.813) priced with 0 points.

Investment property/non-owner occupied:  5.125% (apr 5.360) priced with 0 points.

If your current mortgage is FHA, then you can opt for an FHA streamlined refinance.  If you have a little equity, you can opt to have an appraisal and finance up to 97% of the appraised value to include your closing costs and prepaids.   If your home does not have equity, and you have the funds available, a "no appraisal" option is available.  With the no-appraisal streamline FHA refinance, closing costs and prepaids cannot be financed.  Your loan amount is limited to your current balance less a possible credit of your original upfront mortgage insurance premium and your new upfront mortgage insurance premium can be financed.  

Here are FHA refinance rates (as of 12:30 today):

4.500% priced with 0 points (apr 5.090) appraisal optional.  Loan amounts up to $417,000.

4.750% priced with 0 points (apr 5.518) appraisal optional.  Loan amounts $417,001 – $567,500 in King, Pierce and Snohomish Counties.

FHA currently will allow up to an 85% loan to value for a "cash-out" refinance, which may include paying off a second non-purchase money second mortgage.  "Cash-out" would not be a FHA streamlined refinance and would require an appraisal.

If you have enough home equity, you may not need to do a streamline or Home Affordable refinance.  But it's nice to know your options!   If I can help you review your mortgage scenario, for a refinance or purchase, on a home located in Washington state, or if you would like your personal rate quote, please contact me!

Filed Under: Fannie, Freddie and FHFA, FHA, Refinance

Late Night Friday Funny

June 25, 2010 by Leave a Comment

I just caught this funny video via Talon Title on Facebook  and had to share… Seattle's BLEAK!  Go Team USA–Go SOCCER!!

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
World Cup 2010: Into Africa – US Beats Algeria
www.thedailyshow.com
Daily Show Full Episodes Political Humor Tea Party
Filed Under: Just for Fun, Seattle

It’s Official: Freddie Mac Reports Mortgage Rates at Record Lows

June 24, 2010 by Leave a Comment

Mortgage rates continue to trend lower providing some of the lowest mortgage rates of record.   From the Alan Zibel of the Associated Press:

Mortgage company Freddie Mac said Thursday that the average rate for 30-year fixed loans sank to 4.69 percent, from 4.75 percent last week.

That's the lowest since Freddie Mac began tracking rates in 1971. The previous record of 4.71 percent was set in December. Rates for 15-year and five-year mortgages also hit lows.

This provides many Seattle area home owners a great opportunity to reduce their monthly mortgage payments by refinancing.   Even if your home has depreciated, you may qualify for a Home Affordable Refinance with loan to values up to 105% or an FHA streamlined refi with no appraisal.   Mortgages currently without private mortgage insurance (originally with an 80% loan to value with the first mortgage) may qualify to refinance without private mortgage insurance even if their new loan to value is over 80%.

Home buyers who have locked in rates this past week will probably never have the need to refinance while they own their homes. 

Don't expect mortgage rates to stay this low for long.  Do contact your local mortgage professional and see if refinancing makes sense for your personal scenario.  If your home is located in Washington state, I'm happy to help you with your mortgage needs.   You can follow me on Twitter to see what rate scenarios I'm quoting live.

11:00 a.m. update:  Receiving an intraday rate sheet with pricing for the worse from one of the lenders we work with.  (I'm glad I work with more than one–not all of the lenders have increased pricing  yet).  It appears to be a slight adjustment, however we've been averaging 2-3 rate sheets per day…and they all add up.

1:30 p.m. update: Receiving the 2nd intraday rate sheet from the same lender with pricing for the worse.   Pricing with this lender is worse by over 0.3% in fee or 0.125% in rate from this morning's lows.

Filed Under: FHA, Refinance
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