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Month: July 2013

Senator introduces bill to expand HARP Refinance program

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HARP refinance in MNSenate bill S.1375, the “Rebuilding American Homeownership Act” has been introduced by Senator Jeff Merkley, D-OR to try and expand the existing HARP (Home Affordable Refinance Program”.

This has been called by many as “HARP 3“, and is designed to allow loans not currently owned by Fannie Mae of Freddie Mac to be refinanced through the HARP program.

Under the current HARP underwater refinance program, in order to qualify, your existing mortgage loan must be owned by Fannie Mae or Freddie Mac.

If passed, the bill would force Fannie Mae and Freddie Mac to refinance non-Fannie Mae or Freddie Mac loans, and to price in the additional risk into the interest rate so that the program would not cost taxpayers anything.

DO I QUALIFY FOR HARP?

Merley was quoted as saying the “It shouldn’t matter which financial institution owns a loan…” and that “all responsible homeowners should have the option to refinance and save money.”

Merkley also introduced another bill that would encourage people to refinance into loans terms of less than 20-years, which builds equity faster, by paying $1,000 of underwater homeowners closing costs.

Previous attempts at a HARP 3 program, or modifying the current HARP 2 program have not gain much traction in Washington, and these two new bills have no other sponsors.

How to tell if a condo or townhome is FHA Loan Approved

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When buying a condo, there is an extra step many home buyers may not understand that can effect the loan.

Lenders will credit qualify the home buyer, and of course do an appraisal review of the property.  But with any condo, the lender also needs to review the association.  This is done on all loans, including conventional, FHA, and VA.

If the buyer is using an FHA Loan, the condo or townhouse will need to have prior FHA Approval. If a condo association is  not FHA approved, it could indicate a problem with the association that could make getting financing in that complex hard or even impossible.

FHA Condo Association Approval Web site

 

How do I verify a condo association is FHA approved?

It is actually rather simple.  Simply go to the FHA condo website at https://entp.hud.gov/idapp/html/condlook.cfm.

I find it best to search by city or zip code rather than association name. It is the easiest way to get a positive search result.

If the complex is not listed, then it is not approved. If the association not approved, the association needs to get the approval. There is nothing the buyer can do on their own to get the association FHA Approved.

Many times, this forces the potential buy to switch to a conventional loan.  Conventional loans also need condo association approval, but on conventional loans, there is also a pre-approval process. But is the complex is not pre-approved, there IS case-by-case process on conventional loans.

A townhouse may actually be a condo

It looks like a town home, it acts like a town home, but it may legally be a condominium. Don’t assume. Be sure to check with your Realtor or the Association itself. A good rule, but not always is hidden in the legal description.  If it says “Lot and Block”, it is most likely a town home.  If is says “CIC” or Common Interest Community, then it is likely a condo.

Do you already live in a condo that is not FHA Approved?

If you already live in a condo and the association is NOT approved, you should attend the next association meeting to talk about getting the complex approved. Frankly, the lack of an FHA approval means less buyers can buy in your complex, therefore significantly reducing the value of your unit.  It doesn’t cost very much, and is not very difficult for the association to get FHA approval.

Three Great Reasons to Buy A House Today

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real1Thinking about buying a new home, but maybe still sitting on the fence? Here are three great reasons to buy a home today:

1. Home Prices Rising:  The Minneapolis, St Paul market, home prices have risen 15.1% in the last 12 months. The bottom of the market has come and gone. But there is a lot of room for upward movement. If prices continue to rise, and you buy now, your equity will begin to build as soon as you close.

2. Builders Are Building Again: Land costs more, materials cost more, labor costs more. This means new home prices are going up, too. Buying today may be your best option because the cost of new constructions isn’t likely to decrease.

3. Mortgage Interest Rates Still Historically Low: Interest rates are up from a few months ago, but still in the mid 4% range (as of today). This is still considered fantastically low. Mortgage interest rates are projected to be in the mid 5% range next summer, so buying today and locking in a super low rate is a smart move.

St Paul Home Price continue to climb

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Minneapolis and St Paul area home owners continue to see an upward climb in the value of their homes. The median sales price soared up 17.5 percent over last year.  According to the Minneapolis Area Association of REALTORS®, the June 2013 average value was $210,000, the highest it’s been since December 2007, just as the market was starting to crash.  By the way, mortgage interest rates at the time were about 6.10%.

house_from_wordLess homes for sale than what we’d like to see, combined with fewer foreclosures, and low mortgage rates continue to fuel these price increases.  New listings were up in June by over 20% from last year, but still there are more buyers than sellers,  sparking competition amongst buyers.

While mortgage interest rates are still historically low, they have increased about 1% from the lows back in May 2013 to around 4.50% today. This increase has put more pressure on the home prices as those who were sitting on the fence are jumping into the water before rates go even higher.

In the sub $250,000 price range, considered the “most affordable”, many homes are selling very quickly with multiple offers just days on the market.  Therefore all prospective buyers need to be fully lender pre-approved and ready to make an offer the moment they see a house they love.

Rising home prices and higher mortgage rates caused housing affordability to decrease by 15.9 percent from last year. However, home prices remain well below pre-housing-crisis levels and mortgage rates remain historically low, even after the rate increase.

 

Getting a mortgage loan after paying cash for a home

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In today’s market, it is pretty common to pay cash for a home in the Twin Cities area. Maybe because you needed to act fast and didn’t have time to get a loan, or maybe because of the condition on the home, the house wouldn’t qualify for traditional financing.

Regardless of the reason, I speak with a lot of customer who pay cash for a home, then want to take a standard mortgage loan out against it right away. You may be able to take cash out, but there are rules to understand.

Cash out refinanceCash back after buying with cash rules

While each lender may be slightly different, here is the common Freddie Mac rules for getting cash back.

Primary Residence and Second Homes Only:

If you’ve owned the home MORE than 6 months.  Normal cash out refinance rules apply.

If you’ve owned the home LESS than 6 months,  then ALL of the following requirements must be met to get the loan:

  • The executed HUD-1 Settlement Statement from the purchase transaction must evidence that no financing secured by the subject property was used to purchase the subject property.
  • The Borrower must be reflected as the owner of the subject property on the preliminary title report and there must be no liens on the subject property.
  • Source of funds used to purchase the subject property must be fully documented.
  • If funds were borrowed to purchase subject property, those funds must be repaid and reflected on the HUD-1 Settlement Statement for the refinance transaction.
  • The amount of the cashout refinance Mortgage must not exceed the sum of the original purchase price and related Closing Costs, Financing Costs and Prepaids/Escrows as documented by the HUD-1 Settlement Statement for the purchase transaction.
  • There must have been no affiliation or relationship between the buyer and seller of the purchase transaction.
  • The cashout refinance Mortgage must comply with the applicable Loan-to-Value ratio limits and all other Freddie Mac requirements

Homebuyer jump into market as rates rise

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Mortgage rates have risen about 1% since May 2013, and that is clearly making potential home buyers jump into purchase contracts more sooner than later according to a recent Fannie Mae housing survey.
Real Estate, Minnesota, Minneapolis, for sale, mortgage rates, interest rates
Get Pre-Approved Today – Click HERE

The survey shows 57% of people expect mortgage rates to rise in the next 12 months, with just 7% responding that rates will remain stable. The previous survey indicated only 46% of people expected mortgage rates to rise.

Potential home buyer clearly see the writing on the wall, and anyone even close to purchasing a home realize interest rates, while up from previous lows, are still historically good.  Given the fact home prices are rising and rates are rising, homebuyers have decided that now is time to get off the fence and get serious about buying real estate.
Americans’ outlook on the economy deteriorated slightly, though many were more optimistic about their personal situation. The share of people who expect their own personal financial situation to improve over the next year jumped to 46%, its highest level in three years, while  16% said they expect their situation to worsen, unchanged for the third consecutive month.

HARP Refinance still going strong in MN and WI

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The Federal Housing Finance Agency (FHFA) special underwater refinance program, commonly known as HARP (Home Affordable Refinance Program) is still going strong.

HARP refinance in MNWhile mortgage rates have risen a bit, there are still millions of people who could take advantage of the program to save significant money on their monthly mortgage payments.  Because of this, the FHFA had Fannie Mae and Freddie Mac extend the HARP program by two years to December 31, 2015. The program was originally set to expire December 31, 2013.
More than 2.2 million homeowners have already refinanced through HARP since HARP was introduced by FHFA and the U.S. Department of the Treasury in April 2009.  HARP is uniquely designed to allow borrowers who owe more than their home is worth the opportunity to refinance their mortgage.Extending the program will continue to provide borrowers opportunities to refinance, give clear guidance to lenders and reduce risk for Fannie Mae, Freddie Mac and taxpayers.
In addition, FHFA will soon launch a nationwide campaign to inform homeowners about HARP. This campaign will educate consumers about HARP and its eligibility requirements and motivate them to explore their options and utilize HARP before the program ends.

To be eligible for a HARP refinance homeowners must meet the following criteria:

  • The loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  • The current loan-to-value (LTV) ratio must be greater than 80 percent.
  • The borrower must be current on their mortgage payments with no late payments in the last six months and no more than one
  • late payment in the last 12 months.

Check here to see if your loan is owned by Fannie Mae or Freddie Mac