MN, WI, and SD Homeowners Urged To Switch To A 15-Year Fixed Mortgage

MN, WI, and SD Homeowners Urged To Switch To A 15-Year Fixed Mortgage

If you still owe on your MN, WI, or SD home, you really need to consider switching to a 15-year fixed. Here at Mortgages Unlimited, many of our Loan Officers, including myself **, have made the switch to 15-year mortgages because we’re obsessed with getting the right mortgage and we know all the advantages 15-year mortgages provide.

Using a sample $200,000 home loan, homeowners with a 15-year mortgage can save over $113,000* over the life of their loan. We also help homeowners lock in historically low rates that will never rise. At Mortgages Unlimited,  it’s all about helping homeowners find a mortgage they can be confident in, and what better mortgage to offer than the one our own Loan Officers, including myself have.

Get A Mortgage Review Today And See How Much You Can Save With A 15-Year Fixed

15-Year Mortgages Help Homeowners Pay Off Their Homes In As Little As Half The Time And Save Up To $113,000 OR MORE In Interest Payments *

The reason for this is pretty simple. To pay off your house, you have to pay off the principal. In a 30-year mortgage your first 10 years of payments go mostly towards paying interest on the loan – meaning for 10 years you aren’t making a lot of headway towards paying down the principal. In a 15-year mortgage you attack the principal you owe on your home and depending on what your current 30-year mortgage rate is you could actually do so for about the same monthly payment. Think about that, homeowners who switch to 15-year mortgages:

1) chop up to 15 years off their mortgages,
2) save up to $113,000* OR MORE in interest payments, and
3) may be able to do so while keeping their monthly mortgage payments pretty much the same, depending on your current loan and interest rate

How To Switch To A 15-Year Fixed?

It is easy. Start by completing an online application, or call our mortgage experts at (651) 552-3681. We’ve streamlined the refinance process and our team of fully licensed Loan Officers can tell you how much you can save by switching to a 15-year fixed. It only takes about five minutes to use the easy online form to get connected to mortgage experts, and our radically simple mortgage experience can help you see very quickly if you’re in the right mortgage or not. It can’t hurt to look. Rates for 15-year fixed mortgages could be on the rise soon so now is the time to check your eligibility.

Probably because the 15-year payment will be a bit higher than your 30-year payment. While true, most people can easily afford it, and take advantage of the huge savings. We also think it’s probably because homeowners don’t realize the crazy amount they pay in interest payments to have a 30-year mortgage. If homeowners knew they’d have to pay up to an extra $113,000* in interest payments to have a 30-year mortgage instead of a 15-year, we’re guessing most homeowners would make the switch. What we do know for sure is that Mortgages Unlimited delivers a simpler mortgage experience, and that we can quickly help homeowners calculate how much they could save by switching to a 15-year fixed.

Apply Online
No Obligation to apply, and see what YOU qualify for.

Start your savings today!

* Savings based on sample $200,000 loan between current 30-yr rates at 4.00% versus 15-yr rates at 3.25%.

Your savings may be much greater or smaller depending on your loan size. Not an offer to enter into an interest rate lock agreement per MN Statute. Not everyone will qualify. Rates subject to qualifications, and can change daily. A full application is required to lock a rate. Equal Housing Lender. NMLS 274132.  ** Joe Metzler


Underwaters homes dramatically lower

Minneapolis, MN: Since the real estate market collapse, many home owners found themselves owning much more than their home was worth on the fair market. This created many problems, from the inability to sell and move, foreclosure from the inability to sell, and a hard time refinancing because of the lower value.

Homes for sale - real estate - MinnesotaThe housing market has been slowly climbing up the ladder, and according to a report from Zillow, the share of homes underwater has now dropped to under 20%

The same report stated that the underwater rate is currently about 19.4% of all homes. This is an improvement of about 3.9 million homes going back above water in 2013.  This is down from about 27.5%  of all homes underwater in late 2012.

As values increase, millions of people who may have had a pent up demand to move, but couldn’t, now suddenly find themselves once again above water.  More people are likely above water than actually realize, as many people rely on county tax statements for their value estimates. But tax value and fair market value, or what you could actually sell the home for, are many times two dramatically different numbers.

I advise anyone thinking of selling, to contact a local Real Estate Agent to get a fair market assessment of their home, and to contact a mortgage broker in their area to see what they would qualify for in a new home, or to see about refinancing.

The market is expected to slowly continue the climb towards a more balanced market, with the report estimating the negative equity of homes nationwide to drop even further, to just 17.2% by the end of 2014.


Refinancing after a bankrupcy

Q: Do you have to reaffirm your mortgage with a bankruptcy to refinance the mortgage loan today?

Minneapolis, MN:  I hear this question on a fairly regular basis, and the plain and simple answer is NO.

You DO NOT need to reaffirm a mortgage loan that was in a bankruptcy to refinance that loan today. Anyone telling you otherwise is 1000% wrong.

refinance mortgage bankruptcy affirmation reaffirmationIf you did not reaffirm your mortgage during your bankruptcy, the mortgage did not disappear. It is still a lien on your house.  It is still owed and must be paid unless you are willing to risk losing the property.  The mortgage company — the servicer — virtually always wants you to make these payments.  And they often don’t care about the reaffirmation and will not waste their time (and your money) asking for it during the bankruptcy case.

If you pay, you get to stay

If you don’t pay, you will be foreclosed on and have to vacate the house.  The bankruptcy will protect you from ever having to pay any loses ON THAT LOAN.  But if you sign and take out a new loan, it is a new debt, a new loan, and the previous bankruptcy protection from the old loan is gone.

The problem new lenders have is because of the bankruptcy, the current lender is no longer reporting your payment history to the credit bureau.  A new lender is required to get a current payment history, and that can sometimes be very difficult.

The Loan Officer is Wrong!

With that said, some lender want you to reaffirm.  Sort of stupid, but that is up to them…  Not every lender feels the same way. Plenty of Loan Officer are also simply wrong in saying you need to reaffirm the loan first. If you are talking to someone telling you you need to reaffirm to refinance, call a different lender.
If you in this situation for a property in Minnesota or Wisconsin, we can help you.  Just apply online or call (651) 552-3681

 


Getting a mortgage loan after paying cash for a home

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


As rates rise, should Real Estate agents worry?

Minneapolis, MN:  Yesterday the Federal Reserve “clarified” to everyone when it will likely end its economic stimulus program.  This ended weeks of speculation that has caused mortgage rates to surge to the highest levels since 2011, and up over 1/2% in physical rate in the past two months.

house_new_constructionBased on the news, it appears mortgage rates have a new bottom, which is about where they are at today. There is plenty of room for rates to move higher.  Express this to your clients, and get the fence sitters moving.

Loan Officers and Real Estate Agents have great fear for future purchase activity.  Is it founded?  “There should be some concern, but overall, I only expect a minor slowdown in purchase activity. People always buy homes, regardless of rate.” said Eric Metzler, a Senior Loan Officer with Mortgages Unlimited in St Paul, MN.

Will home sales fall as rates rise?  Sure… But most people will still buy, just maybe a little less home. As for the future?? If you are a full time experienced agent with a good past client based, I wouldn’t worry about it.

Desperate Loan Officers

Today, a huge number of Loan Officers have been living largely on refinance activity.  This business will drop dramatically as rates creep up.  Many of these Loan Officers have little, if any, purchase business experience.  We would expect to start seeing layoff’s from many of the larger banks, and online refinance powerhouses.  We should also start seeing Loan Officers back again hitting the streets, trying to drum up Realtor referral business.

My world of advice is to pass on refinance specialists trying to turn into purchase loan hopefuls.  While basic loan requirements are similar, purchase loans have a whole new world of requirements for these Loan officers, and you don’t want them experimenting on you and your clients. Stick with licensed, and experience purchase loan specialists like myself.

 


Less underwater homes as values increase

banner_ad_appraisalUnderwater Mortgages Drop by 850,000

Minneapolis, MN:  Millions of homes went underwater at the beginning of the real estate and mortgage crash. Underwater homes, where the owners own more on the mortgage loan than the home is currently worth, have been a thorny issue, preventing many people from refinancing to today’s low mortgage rates, or from selling their homes.  If has also cause many people to throw in the towel and simply walk away from their home.

CoreLogic, a real estate data firm has reported that an estimated 850,000 homes are no longer underwater in the first quarter of 2013 due to rising home values.  They also reported that another 11.2 million homeowners are now in a “low equity” position, which means they are no longer underwater, but have only a little equity.

This means an estimated 9.7 million homes, about 1 in 5 are still underwater.

Another 11.2 million homeowners were in a low-equity situation, not underwater on their mortgage but with less than 20 percent equity in their homes, a situation that can make refinancing difficult or more expensive.

Rising values

The combination of low mortgage rates, and less foreclosures on the market has help boost values and increased sale prices the past year.  In the metro Twin Cities area of Minneapolis / St Paul, average home values have risen 15.1% in the past year alone.

Real Estate is local

Just a few states account for the almost 1/3rd of underwater homes. Florida, Michigan, Arizona, and Georgia. Many people in the Twin Cities are now able to sell and move up to a bigger home, or to easily take advantage of low mortgage rates again, especially with programs like HARP, the Home Affordable Refinance Program, which was specifically designed to assist underwater homeowners who got their current mortgage loan prior to June 1, 2009.


Mortgage Rates down for the Week ending 4/11/2013

arrow_percentFreddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates edging down for the second consecutive week following weak employment reports. The average 30-year fixed-rate mortgage at 3.43 percent this week remains near its 65-year record low and continues to provide support for the housing recovery.

News Facts

  • 30-year fixed-rate mortgages (FRM) averaged 3.43 percent with an average 0.8 point for the week ending April 11, 2013, down from last week when it averaged 3.54 percent. Last year at this time, the 30-year FRM averaged 3.88 percent.
  • 15-year fixed rate mortgages this week averaged 2.65 percent with an average 0.7 point, down from last week when it averaged 2.74 percent. A year ago at this time, the 15-year FRM averaged 3.11 percent.
  • 5-year  adjustable rate mortgages (ARM) averaged 2.62 percent this week with an average 0.5 point, down from last week when it averaged 2.65 percent. A year ago, the 5-year ARM averaged 2.85 percent.
  • Interest rates for HARP refinance transaction slightly higher
  • Interest Rates for FHA Loans, and VA Loans slightly lower

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates fell further this week following a lackluster employment report for March. The economy added just 88,000 net new jobs last month, about one-third as many as February and the fewest since June 2012. In addition, approximately 496,000 people left the workforce causing the unemployment rate to fall to 7.6 percent. Further, average hourly earnings were unchanged in March, indicating income growth remains tepid.”

————

Freddie Mac’s survey is the average of loans bought from lenders * last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s best MN and WI mortgage interest rates.

 


Can’t refinance – Maybe you can with HARP – Find out here

HARP 3.0 ???  Help for underwater home owners

St Paul, MN:  Virtually, all homeowners have lost value on their homes in recent years.  For many, this has created some challenges to refinancing and taking advantage of today’s super low mortgage interest rates.

There are a few programs with can help, depending on what type of mortgage loan you have today.  May people have successfully used program like HARP (Home Affordable Refinance Program), the FHA Streamline Refinance, or even the VA Streamline refinance known as an IRRRL loan.

Sadly, not everyone fits the criteria.  Therefore Washington has been floating the idea of an expanded HARP 3 Refinance ProgramIt doesn’t exist yet, and may never exist…  But if it does, here is what it may look like:

There are some basic criteria for the #MyRefi or HARP 3 refinance program:

  • Current loan is NOT backed by FHA, USDA, Fannie Mae, Freddie Mac
  • Primary home only. No second homes or investment home
  • Loan less than $750,000.
  • On time mortgage payments for the past 6 months, with no more than one 30-day late payment in the past year.
  • Credit score above 580

This new HARP 3 refinance program proposal mirrors the current HARP 2.0 refinance loan program (possible no appraisal, less document, etc), except it would potentially also allow any underwater home owner, not just those who have a loan owned by Fannie Mae or Freddie Mac.

Try out the governments “Would I qualify for a refinance” below..


30-Year Fixed-Rate Mortgage Averages 3.40% for week ending Jan 3, 2012

lmrMinneapolis, MN:  Freddie Mac yesterday released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates moving higher following December’s employment report. The 30-year fixed averaged 3.40 percent, its highest reading in eight weeks. The all-time record low for the average 30-year fixed was 3.31 percent set November 21, 2012.

News Facts

  • 30-year fixed mortgage rates (FRM) averaged 3.40 percent with an average 0.7 point for the week ending January 10, 2013, up from last week when it averaged 3.34 percent. Last year at this time, the 30-year FRM averaged 3.89 percent.
  • 15-year fixed mortgage rates this week averaged 2.66 percent with an average 0.7 point, up from last week when it averaged 2.64 percent. A year ago at this time, the 15-year FRM averaged 3.16 percent.
  • 5-year adjustable mortgage rates (ARM) averaged 2.67 percent this week with an average 0.6 point, down from last week when it averaged 2.71 percent. A year ago, the 5-year ARM averaged 2.82 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Fixed mortgage rates increased slightly following a positive employment report for December. The economy added 155,000 jobs, above the consensus market forecast, and November’s job growth was revised upward by another 24,000 workers. This helped keep the unemployment rate steady at 7.8 percent, the lowest since December 2008. For all of 2012, 1.86 million jobs were created and represented the largest annual gain since 2006.”

Freddie Mac’s survey is the average of loans bought from lenders * last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s best MN and WI mortgage interest rates.


Turn your Jumbo Loan into a lower rate Conventional Loan

Minneapolis, MN: As mortgage interest rates continue to sit at historical lows, many homeowners have taken this opportunity as a time to refinance into a fixed rate home loan. Inevitably interest rates will rise and for this reason it makes sense to lock into a great low mortgage interest rate sooner rather than later.

While interest rates are very low for all home loans, if you are looking for a fixed rate loan and you have a jumbo mortgage (over $417,000 in 95% of the country and ALL of Minnesota and Wisconsin), you will see a higher fixed rate available. That is because the Jumbo market is essentially a private market for mortgages, as opposed to conventional loans, which are backed by Fannie Mae and Freddie Mac.

Given this fact, many homeowners who have Jumbo mortgages and are looking to lock into a fixed rate loan, are now considering paying down their mortgages to the conventional loan limit of $417,000 and then refinancing. As this would allow them to trade in their jumbo loan for a new fixed rate conventional loan, at a lower interest rate. The current difference between a 30-yr fixed rate jumbo loan versus a conventional loan is about 1/2%.  Dropping your rate by that much can amount to huge savings over time.

Now obviously, this only applies to those who have the funds to do so, but here in Minnesota especially, there are many homeowners with home mortgages just slightly above the conventional loan limits. For those homeowners, it may make sense to pay down the mortgage and lock into the lower conventional fixed rate.

If you are considering refinancing your Jumbo mortgage and paying down your existing loan to a conventional loan, as always please contact a local licensed Loan Officer, not an unlicensed bank application clerk, to discuss all of your options.

This pay down options isn’t right for everyone, but for many homeowners it could be a wise decision to lower your loan balance and lock into a low fixed conventional loan rate.

An original article by Joe Metzler (C) 2012 Metzler Enterprises, LLC for www.MnRealEstateDaily.com


Fannie Mae Delayed Financing Exception

Have you ever paid cash for a home, then found out you need to wait at least 6 months to refinance it?

Well Fannie Mae has now come out with the Delayed Financing Exception.  You are now allowed a cash-out refinance within six months of a purchase transaction when NO Financing was used to purchase the property.  However, there are certain restrictions in order to qualify.  They are as follows:

  • The new loan cannot be more than the actual documented amount of the borrower’s initial investment when they bought the property, plus the financing of closing costs, preapid fees, and points (subject to the ltv, cltv, hcltv ratios).
  • Must have been arms-length transaction.
  • The purchase was documented with a HUD-1,which confirms that there was no mortgage financing involved to acquire the property.  The preliminary title report must verify the same.
  • The source of the original funds used to finance the property must be verified by bank statements, personal loan documents, HELOC, gift, 401k, etc).  Any loans used as the source for the purchase transaction (including gifts), will be required to be repaid and must show on the new HUD-1. ( Basically,  the funds from the new loan must be used to replenish or payoff where the funds came from including a 401k, hint hint).
  • All other cash-out refinance requirements are met and cash-out pricing is used vs rate and term.

NOT SO FAST:  Sounds great right?  Unfortunately, Fannie Mae doesn’t do loans.  They buy loans after the fact from lenders.  You need to find a lender willing to do this, and frankly, I don’t know a single lender that will allow you to refinance this way.

The bottom line:  Expect to wait at least 6 months to refinance after you paid cash for a home – no matter what you read online!.

 


Ways to pay off your mortgage debt faster

St Paul, MN: If you surf the cable TV channels, listen to talk radio, or search online, you will find numerous financial and debt management experts offering tips and tricks on managing debt such as mortgage, credit card debt, student loan and so on.

However, it is important to evaluate one’s own personal financial situation before implementing any such debt relief tips. This is to ensure that you benefit from such advice and not further pile up debts that you become responsible for. So, here are 5 strategies to repay your Minnesota  mortgage faster.

Make Extra Payments: If there is no pre-payment penalty, you can make extra payments on the mortgage loan. The extra amount of money is taken off from the principal mortgage amount. For example, a $400,000 loan at 4% rate for 30 year fixed will pay off in only 25 years if you make $200 extra payment every month.

Make Bi-Weekly Payments: Bi-weekly payments on Minnesota mortgage loans are better than a monthly payment. In doing so, at the end of the financial year, you are paying one month extra payment. Therefore, the extra month’s payment will shorten the term of the mortgage. Every penny counts when you’re repaying any sort of debt. For example – Using the same numbers as above, by making bi-weekly payment you would pay off the loan is 25.8 years instead of a regular 30 years.

Get a shorter-term refinance loan: This financial strategy has gained in popularity among the borrowers in Minnesota. The rate of interest has nose-dived and it is much simpler for the homeowners to repay their mortgage debts. The advantage of this refinance loan is that by paying high monthly payments you pay off the loan in considerably shorter period of time. For example – Instead of taking a regular 30 Year Fixed mortgage, consider taking a 20, 15 or a 10 year mortgage. If you can afford the payment, you save on interest cost and also pay off the loan much quicker. A few mortgage lenders even let you pick whatever mortgage amortization term you want, from 8 – 30-years. For example, if you have only 12-years left, you can get a new 12-year mortgage loan.

Make a One Time Big Payment: If you get inheritance, gift or a big bonus, you can make one large lumpsum payment. That will reduce your principal balance substantially and thus pay off the loan quicker. You can also ask the lender to “recast” the loan and reduce the monthly payment without refinancing. Don’t just make the extra payment. Talk to your lender first.

The ideas mentioned here are not meant to be a tax advice. You are encouraged to contact your CPA/Financial Adviser before making any significant money decision.

 


HARP 2.0 is really HARP point NO for many people

HARP Refinance – The first few months

HARP 2.0 has been in place for awhile now, and although I have helped several people refinance their underwater loans with the HARP 2.0 loan program, it has actually been a bit disappointing. As typical with government programs, the reality of HARP 2.0 falls short of the perception.

When the program was announced back in October, 2011 it sounded like everyone – no matter what their loan to value or their income would be able to refinance at today’s low interest rates.

When the program moved full steam ahead in March, 2012, many people have been left on the sidelines wondering why they can not qualify, or why they have been denied. Many people with loan-to-values over 105% or with private mortgage insurance are finding their options even more limited.

Here is what I have learned about HARP 2.0 so far…

  • Freddie Mac. For a while it was almost impossible to get an “Approval” through Freddie Mac’s automated underwriting engine. They supposedly have tweaked their system, so if you have a Freddie Mac loan that was denied just weeks ago.  Try again.
  • Unlimited Loan To Value Guidelines – When the guidelines of HARP 2.0 were release last year, they announced that loan to value restrictions were being removed. Although this was the guidelines of the program, most of the large lenders are limiting the loan to value.
  • Appraisal Waivers – The appraisal waivers come from Fannie Mae and Freddie Mac. Each have their own automated valuation systems that determine their estimated value of a property. If the automated system accepts your estimated value of the property, then no appraisal is needed. Keep in mind that not every HARP 2.0 refinance will qualify to have the appraisal waived, and that we are seeing very loan “automated” values.

To read more about the reality of HARP 2.0


Appraisals baffle consumers

St Paul, MN: The appraisal process often baffles consumers.  May people feel that their home is worth more than true fair market value, so the appraised value doesn’t always make sense to them.

The bulk of your homes value is based on finished square footage.

It is important to know that the appraiser is completely independent from lenders, buyers, sellers, and real estate agents, and that the guidelines to which they adhere are dictated by the Uniform Standards of Professional Appraisal Practice (USPAP) and Fannie Mae.

In most states, the mortgage lenders must also disclose the purpose of the appraisal, as each transaction carries its own set of rules. In essence, these important guidelines help appraisers put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value.

For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal. Upgrades can usually be expressed at a higher percentage of their value in newer homes because the only way to obtain those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because typically 25-40% of the project involves demolition and the fixing of issues that aren’t uncovered until the project has already begun, such as plumbing or wiring that may need updating.

Ultimately, the value of the upgrades must be supported by comparable examples within the same marketplace. These comparisons must be drawn from current market activity. The general rule is ‘same or similar, sold within the last six month, within a one mile radius’ of your home. This is a safeguard to prevent appraisers from attaching too high a value to the home in question, and opening up the appraisal for review. This guideline further states that appraisers can only base their opinion on the value of home sales that have actually closed.

Maintenance items don’t increase value. That new roof you just added doesn’t really add any value.  It was maintenance. If your home previously didn’t have a roof, and now you added a roof – that would add value!

Don’t confuse curb appeal with maintenance. Following the same roof theory. A brand new roof sure makes a potential buyer feel better about your home – but how much more would a buyer pay? Not much.

Mortgage lenders and Loan Officers must follow  the guidelines in the Home Valuation Code of Conduct, which among other things prohibits a lender picking the actual lender (must be randomly assigned),  from having any contact with, or influence on how the appraiser values a home.

Wondering what your home is worth? Thinking of selling your home, or refinancing to a lower interest rate? Only an actual appraisal from a licensed appraiser will give you a true number, but here is a online tool that can help give you an idea of what your home is worth.

 


HARP 2 refinance program in MN and WI

HARP 2.0 refinance program details in MN and WI.

St Paul, MN: The much anticipated revised HARP Refinance Program (HARP 2) is now in effect, making it much easier for underwater home owner to refinance their mortgage into today’s low mortgage rates.

The two biggest guideline changes to the HARP 2 program include the POSSIBILITY of unlimited Loan-to-Value and the POSSIBILITY to refinance even if you have Private Mortgage Insurance (PMI). This opens up financing opportunities for seriously upside home owners who have kept up with their current mortgage obligations.

There is a LOT of misinformation out there... The reality is NO LENDER ANYWHERE can promise you a HARP 2 refinance approval WITHOUT having a full application and submitting that application through either Fannie Mae or Freddie Macs automated underwriting computers (AUS).

 


NO Closing Costs Loans COST Money

I constantly receive requests for a No Cost loan. Sadly there is no such thing.

All loans have closing costs associated with putting the loan together.

Just like you, participants in the mortgage loan process don’t work for free. The Appraiser, Title Officer, Title Insurance, County Recording Fees, Minnesota Mortgage Registration Tax, as well as your lender all need to get paid as part of the process.

Each of these parties charge fees for their service in processing and funding your loan. The Lender’s responsibility is to explain to you what the services and costs are, and to give you an estimate of the total costs when you apply for a loan. This estimate comes in the form of a document titled Good Faith Estimate of Closing Costs. It is only an estimate, but it should be very close to your actual costs. Lenders are not allowed to pad, or add onto the costs charged by these other parties, but rather simply pass on what they charge. The vast majority of closing costs go to third parties, not your actual lender.

The real question is: How do I get a loan so I don’t have to pay for these required services? The simple answer is you can’t. What you can do is determine how they get paid.

Purchasing or refinancing, it basically works the same way. All of the costs associated with transaction are paid in one of four ways: By you in cash, by the Seller (in a purchase), by rolling it into the new loan amount (refinance), by the Lender, or a combination thereof.  The most common way in a refinance is by rolling the closing costs into the new loan amount.

Now you may be saying “Wooh-Hooh, let the lender pay”, but you need to know how the lender can do this, and why it may not always be such a smart move.

To have the lender pay your closing costs, you agree to accept an interest rate that is higher than what is considered a “Market Rate.” In doing this, the lender receives more cash than just the face amount of the mortgage loan when they sell it to an investor on the secondary market. This excess cash is what the lender uses to pay some or all of your closing costs. This means that over the life of the loan, you will be paying more interest to the lender than you otherwise could have.

Does this strategy make sense for you? Maybe. It depends on several factors. How much higher is the mortgage rate and what is the monthly cost to you in increased payment? How big or small is the loan? How long do you plan to stay in this loan? Do I have the cash to pay the costs out of pocket?

This is where it becomes important to work with a Licensed Mortgage Originator and not a bank employee. As I have said many times, A Mortgage Banker / Broker is required to be Trained, Tested and Licensed in all aspects of Mortgage Origination. A bank employee is usually just registered, not tested, not licensed, and not required to be educated, tested, or licensed.

A NO COST loan is not automatically good or bad.

A local licensed Loan Officer will do the math with you, and take the time to show you the pros and cons of each method of paying closing costs so you can choose the best option in your particular situation.