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Refinance Articles

News and information on refinancing your home in MN or WI

MN FHA streamline Refinance Loans

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FHA Refinance

Learn About Your Mortgage Options

Homeowners enjoy the benefits of investing in their property year after year. For some, there comes a time when that investment can come in handy. Refinancing with an FHA loan can prove to be an effective way to put that equity to work. Keep in mind that FHA refinancing is only available to homeowners who are currently using their home as their principal residence.

FHA options to homeowners who are considering an FHA refinance mortgage:

FHA CASH-OUT REFINANCE

This refinancing option is especially beneficial to homeowners whose property has increased in market value since the home was purchased. A Cash Out refinance allows homeowners to refinance their existing mortgage by taking out another mortgage for more than they currently owe.

FHA STREAMLINE REFINANCE

This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal. FHA Streamlined Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.

FHA Up Front Mortgage Insurance Premiums (UFMIP)

FHA has recently made changes to the required mortgage insurance. June 11, 2012 is the date FHA Up Front Mortgage Insurance Premiums (UFMIP) will be lowered for some borrowers applying for FHA Streamline Refinance Loans. An FHA Mortgagee Letter 12-4 explains the changes, which affect some, but not al, FHA streamline refinancing loans:

For all FHA Streamline Refinance transactions that are refinancing existing FHA loans that were endorsed on or before May 31, 2009, the UFMIP will decrease from 1.75 percent to just 0.01 percent of the base loan amount.

Basically, those borrowers who have an FHA home loan for a single-family property that was endorsed on or before May 31, 2009 are eligible for a lower rate on their Up Front Mortgage Insurance Premiums. It’s important to note that this rule applies only to those with an FHA Streamline refinancing loan with a case number assigned on or after June 11, 2012.

The same mortgagee letter contains another announcement; “Decrease to Annual Mortgage Insurance Premium on Certain Streamline Refinance Transactions”. In this message, the FHA states, “For all Single Family Forward Streamline Refinance transactions that are refinancing FHA loans endorsed on or before May 31, 2009, the Annual MIP will be 55 basis points, regardless of the base loan amount.”

These two items make for a very significant savings on FHA streamline refinance transaction here in Minnesota, Wisconsin, and the rest of the country.

One other item. It’s important to remember that the FHA does not regulate FHA streamline mortgage interest rates or set them in any way except to state that such rates must be reasonable and customary according to the housing market in that area. Borrowers should expect to negotiate interest rates with the lender and/or comparison shop for the best rates and terms. 

FHA Mortgage Insurance REFUND Chart

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An FHA STREAMLINE REFINANCE is HOT right now because of the super low mortgage rates, so it is important to understand a possible FHA Mortgage insurance refund you may qualify for.

If you have an FHA loan, FHA charges an upfront MIP (mortgage insurance premium). This amount is calculated as a percentage of the loan amount, then added to your loan amount. That MIP amount you paid depends on when the FHA case number was requested.

If you’ve had your FHA loan for less than three years, and your are refinancing to a new FHA loan, you get a refund of some of the initial mortgage insurance premium (MIP) you paid on your FHA loan

The chart below is what FHA underwriters use to determine the amount of money refunded at the time of a FHA to FHA refinance. FHA will refund a percentage of that upfront MIP in the refinance. No refund check or anything is given to you, the refund is simply calculated into the costs of the new loan. The shorter the home owner has had the current FHA loan the higher the refund amount. This amount is displayed on page four of the application section called the “details of transaction” page.

FHA MORTGAGE INSURANCE REFUND CHART

FHA Mortgage Insurance Refund Chart

Example: You are refinancing, and at the time of closing, your current loan would be 2-years and 2 months old. Looking at the chart, you would get a 54% of the original MIP refunded to you as a credit on your new loans closing costs.

VA Streamline Refinance Loan

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Mortgage Rates are at Historic Lows. Start saving money now on your VA Home Loan!

Minneapolis, MN: If you are a veteran, you are eligible for a great benefit, the VA Home Loan. If you currently have a VA Home Loan, you may qualify for another great benefit, the VA Streamline Refinance Loan.

Officially known as The Interest Rate Reduction Refinance Loan (IRRRL), it is one of the easiest refinance loans available today.  The VA Streamline Refinance is the second best programs offered to you through your housing benefits from the Veterans Affairs (the first was buying the home with a VA Home Loan!)

Potential NO Appraisal (upside down might be OK)
Lower Credit Scores
NO Qualifying Debt Ratios
NO Income Verification
NO Out of Pocket Expenses

A good local VA Mortgage Leader will show you how to utilize your Certificate of Eligibility and lower your rate and start saving money today.

VA guaranteed Loans are originated by private approved and authorized lenders. VA Mortgage Home Loans must be used for their own personal occupancy. The VA will guarantee a portion of the mortgage to the lender reducing their risk and allowing opportunity for lower interest rates. The VA Guaranty minimizes the risk to the lender which results in better financing terms.

What you MAY NOT know about home insurance

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Home Car Boat Insurance MN St Paul Minneapolis
You actually SAVE, when you get a quote from a person, not a computer!

What you MAY NOT know about insurance

There are many considerations in selecting home insurance.  One you may or may not know of is “Family liability protection coverage”.  This protects you for medical expense in the event that someone is seriously injured on your property.

Many people choose $100,000 in protection, but an accident resulting in someone who has to be in intensive care for a week, or who has an extended hospital stay on top of intensive care may eat up that $100,000 in protection rather quickly.  Once the $100,000 is exhausted, a client is personally on the hook for anything above that, and the home typically ends up with a lien.

An increase in protection to $300,000 can cost as little as an additional $35 per year.  It’s the kind of options that a good insurance agent points out to clients to ensure the client’s assets are protected, and something the online quoting systems just can’t show you!

Also, you may want to cover yourself with at least a Million Dollar umbrella policy. Sounds exotic and expensive, but is actually awesome and inexpensive.

Mortgage Interest Rates Hit All Time Low

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Average 15-Year Fixed-Rate Mortgage Breaks Barrier, Falls To 2.97 Percent

MCLEAN, Va., May 31, 2012 /PRNewswire/ —  Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates following bond yields lower to new all-time record lows. The 30-year fixed averaged 3.75 percent setting a new all-time record low for the fifth consecutive week. The 15-year fixed averaged an unprecedented 2.97 percent bringing three of the four benchmark mortgage rates below 3 percent for the first time in Freddie Mac’s weekly survey.

NOTE: Rates reported by Freddie Mac are averages from last week, and may or may not be reflective of actual interest rates available today, nor your individual situation

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 3.75 percent with an average 0.8 point for the week ending May 31, 2012, down from last week when it averaged 3.78 percent. Last year at this time, the 30-year FRM averaged 4.55 percent.
  • 15-year FRM this week averaged 2.97 percent with an average 0.7 point, down changed from last week when it averaged 3.04 percent. A year ago at this time, the 15-year FRM averaged 3.74 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.84 percent this week, with an average 0.6 point, up from last week when it averaged 2.83. A year ago, the 5-year ARM averaged 3.41 percent.
  • 1-year Treasury-indexed ARM averaged 2.75 percent this week with an average 0.4 point, unchanged from last week. At this time last year, the 1-year ARM averaged 3.13 percent.

No closing cost loans and interest rates

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Best Interest Rate or Low Closing Costs?

One of the most confusing areas for consumers in a mortgage loan transaction are closing costs. There are advantages and disadvantages of the highly advertised no closing cost loans.

First and foremost, there is no such thing as a zero cost loan! No one works for free!

Everyone knows there are costs associated with getting a mortgage loan; appraisal, credit reports, state taxes, county recording fees, title companies fees, lender fees, escrows, and more. Someone has to pay these fees, and it is always YOU. How you pay them is you need to understand.

In a no lender fee or no closing cost mortgage loan, the lender simply uses “negative” points to offset your costs. For example by selecting maybe a 4.75% interest rate versus a 4% interest rate, you can reduce (or offset through interest rate) most, if not all of your closing costs.

By choosing this option, it appear as if you saved thousands in closing costs. GREAT! But while lower costs always sounds good, you now have a significantly higher interest rate! OK, now what?

No matter what anyone says, a no closing cost, or no lender fee loan is NOT automatically a great deal!

Although it may sound so much better than paying thousands in closing fees, you have to analyze each individual loan and client situation to determine the benefits. Many lenders speak highly of the “thousands of dollars” you save in fees. They never discuss the fact that you may spend significantly more in interest over the full life of the loan than you ever saved in up-front closing costs!

There is a break even point… Generally speaking, if you are in the home under 5-years, a low or no closing cost can be a good deal. On the other hand, being in the loan more than 7-years generally means the no closing cost loan actually costs you a lot of excess interest.  Talk to a local licensed mortgage professional (not a bank application clerk) and have them run the numbers on both options to see what makes most sense for you!

FHA Streamline loans getting cheaper

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Minneapolis, MN: For certain FHA loan backed homeowners, refinancing via the FHA Streamline Refinance program is about to get a lot less expensive. Beginning June 11, 2012, FHA implements a new policy for its mortgage insurance rates.

Millions Of FHA Homeowners Now Eligible

FHA mortgage rates have been steadily falling. Unfortunately, the FHA mortgage insurance rates have not. Today’s FHA homeowners pay up to 1.25% in annual mortgage insurance premiums — triple the rates that FHA backed homeowners paid just 4 years ago.

For new FHA homeowners, those buying a home today and using the FHA’s low down payment mortgage program, for example — the FHA’s rising mortgage insurance rates are a nuisance more than anything else. High insurance premiums are the price you pay for getting access to a mortgage with just 3.5% down.

But, for homeowners who already have an FHA backed loan, rising mortgage insurance rates have made it difficult to qualify for the FHA Streamline Refinance, the FHA’s “no appraisal needed” refinance program. This is because while for many people, we can lower their interest rate over 1%, the new higher mortgage insurance costs eat up all the savings. The program rules state that a mortgage applicant’s mortgage payment fall by at least 5% in order to qualify for the FHA Streamline Refinance.

“Mortgage payments” are defined as (1) monthly principal + interest payments, plus (2) monthly mortgage insurance payments. Principal + interest payments have dropped significantly since 2008, but rising mortgage insurance rates have negated these effects. Making that 5% savings marker has become exceedingly difficult.

Potentially millions of FHA-backed homeowners, while eligible, were effectively eliminated from the FHA Streamline Refinance program and from access to today’s low rates.

For long-time FHA-backed homeowners, that’s all changing.

If your current FHA mortgage was endorsed by the FHA prior to June 1, 2009, you are eligible for the FHA’s “grandfathered” mortgage insurance premiums. The new premiums are dramatically lower than the premiums paid by today’s new FHA customers, making the FHA Streamline program once again a great option for home owners.

For eligible homeowners, the new FHA Mortgage Insurance schedule is as follows :

  • All loans : 0.01% upfront mortgage insurance premium (verus 1.75% for new loans)
  • All loans (except 15-year fixed with LTV of 78% or less) : 0.55% annual mortgage insurance premium (verus 1.25% for new loans)
  • 15-year fixed with LTV of 78% or less : No annual mortgage insurance premium

Adjustable mortgage loans popular again. Here is why.

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Adjustable (ARM) Loan Resets Cause Foreclosures – Fact or Fiction?

Saint Paul, Minnesota: Requests for adjustable mortgage loans dropped to near zero the past few years because of the general belief that adjustable loans are bad, and that recent high levels of foreclosures was because homeowners were doing fine with their loans until their adjustable loans reset to higher rates.

Lenders are again starting to see inquiries about, and home buyers again taking adjustable rate loans because of the super low adjustable loan rates.

FACTS VERSUS FICTION:  According to recent nationwide data, the number one reason homeowners default on their home loans was because their income was cut. This accounted for just under 60% of loans in default. Once traditional causes of foreclosure are factored in (divorce, major illness), cash flow problems added up to a whopping 80% of all “causes” of defaulted mortgages nationwide.

Adjustable payment loans resetting to a higher payment alone accounted for just 2%, according to the data. Rather than being the cause, they appear to be the final straw that breaks the camels back of people who were already in financial trouble.

ADJUSTABLE RATE MORTGAGES: Adjustable Rate Mortgages (ARMs) became one of the most popular and effective tools for helping some prospective homebuyers achieve their dream of homeownership between 2000 and 2007. Initially developed during a time of high interest rates that kept many people out of the housing market, the ARM offers lower initial interest rates by sharing the future risk of higher rates between borrower and lender.

IS AN ADJUSTABLE MORTGAGE RIGHT FOR YOU? Talk to a local licensed Loan Officer (not an unlicensed bank application clerk) about the benefits. ARMs can be an excellent choice of financing under certain conditions, such as rising income expectations, high interest rates, and short-term homeownership plans. But because payments and interest rates can increase, either steadily or irregularly, homebuyers considering this kind of home mortgage loan need to have the income to keep up with all possible rate and/or payment changes. Each ARM has four basic components:

  • Initial interest rate, which is typically one to three percentage points lower than that of most fixed rate mortgages.
  • Adjustment interval, at the time between changes in the interest rate and/or monthly payment will be.
  • Index, what lenders use to determine future rate changes. This is usually LIBOR.
  • Margin, or the additional amount the lender adds to the index to establish the adjusted interest rate on an ARM.

Typical adjustable loans come in 1-year, 3-year, 5-ya, 7-year, and 10-year initial fixed term options. The 5-year adjustable is super popular. The rate is fixed for the first five years of the loan, then becomes adjustable on a yearly basis.

HARP 2.0 is really HARP point NO for many people

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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

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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.

 

Lowest Interest Rate or Lowest Closing Cost – Which is better?

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Lowest Interest Rate or Lowest Closing Costs – Plus No Lender Fee, or No Closing Costs Advertising

HOW DO THEY WORK?

A common mistake shoppers make is to simply ask: “What’s your rate?” or “What are your closing costs?” Both logical questions to ask, but they do not give the response most borrowers need to make a proper decision. Borrowers must understand both rates and fees.  Interest Rates are only half the answer to getting the best mortgage deal. It is possible end up with the lowest rate, or with low or no closing costs, but not necessarily the best deal.

Remember that nothing is ever free. Lenders simply use “reverse points” whenever they claim to offer any sort of low closing costs, or no fee mortgage.

Simply put, the lowest rate & the lowest fees do not go hand-in-hand. NO LENDER can offer both together. I can give you rock bottom rates, but it will cost you in fees. I can give you the lowest fees, but it will cost you in interest rate. Most lenders quote their best rate in combination with covering all third party fees (appraisal, credit report, title company, state taxes, county recording fees, etc) with 1% origination. See the example below.

Here is an example of Rate vs. Costs on a $150,000 – 30 year fixed loan

Here is an example of Rate vs. Costs on a $200,000 – 30 year fixed loan
Lower Rate Standard Quote

Low Cost

Total NO Cost

Rate

4.75%

5.0%

5.25%

5.75%

Origination

1%

1%

None

None

Discount Points

1%

 None

None

None
Closing Costs $5042 $5042 $3042  $0.00

Closing Costs with Points

$7167

n/a

n/a

n/a

Monthly P & I Payment

$1043.29

$1073.64

$1104.41

$1,167.15

10 Years of Interest

$92,352

$95,240

$98,151

$108,037

20 Years of Interest

$155,609

$162,618

$169,718

$188,181

30 Years of Interest

$181,300

$190,232

$199,311

$221,909

WHICH LOAN VERSION is RIGHT FOR YOU?

The combination of rate & fees can be very confusing. One lender is screaming “No closing costs.” A second lender may quote you just $000 in fees, while another lender is offering an amazing rate.

So are closing costs and fees bad? Well if you ask everyone’s brother who has a real estate license and knows everything about mortgages, then the answer you will most likely hear is yes.  I am here to tell you everyone’s brother is probably wrong.

Good enough answer?  I didn’t think so…

Begin by asking yourself “How long am I going to be in this property?” This is the single most important question to determine which option is best for you. Now look at the chart above. It becomes very obvious based on how long you are going to be in the home if ‘Best Rate or Lowest Cost‘ makes the most sense for you and your family.

Congratulations, you are now smarter than everyone’s brother, mother and sister with a real estate license.

Tips for successful refinancing

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TIPS FOR REFINANCING

Minneapolis, MN:  As homeowners rush to take advantage of the new HARP program and some of the lowest mortgage rates in history, it’s easy for them to get lost in the refinance stampede. That’s why it has never been so crucial for borrowers to understand the refinance game, and how to make the most of their application.

LENDERS OVERWHELMED
First, understand most lenders are overwhelmed with the high volume of refinance applications they have received since mortgage rates recently tumbled. Loans that went from application to closing in 30-days, are now running at least 45 days, and for most banks, upwards of 90-days. Online applications that were looked at within hours, now may take a few days before the lender calls you back.

MAKE GOOD LENDER CHOICES
Your mortgage lender choice is more important than most people realize. Generally speaking we suggest you deal with a local lender.  There is nothing some out-state lender advertising super low mortgage rates and with a fancy web site can offer that you can’t get down the street. Choosing your current lender very often is not the cheapest and easiest deal. Rather, just the opposite, as they know so many of their current clients call them without shopping.

ADVANCE PREPARATION
To speed up the process, borrowers should begin to assemble the standard loan paperwork as soon as they decide to apply for a loan. The minimum documentation for a mortgage loan everyone will need is; their two most recent pay stubs, or last two years tax returns if self-employed.  Their last two years W2’s, photo ID, and their last two banks statements.

DON’T DELAY
Once you lock a great interest rate, get the documents to the lender within a day. One missing document, or any delay by the borrower in providing s requested documents by the lender could easily add significant delay or problems with your refinance. As a borrower, you need to make sure once you lock an interest rates, you drop everything and respond to any lender request. Loan processing is first-in, first-out. Sign your paperwork within a day, and let the appraiser in your home as soon as humanly possible. Underwriting won’t even begin until they had your signatures and the appraisal in hand.

TALK TO THE LENDER
Borrowers should also ask their lenders upfront for a time frame on when they should expect to close on the refinance loan and lock their rate accordingly. Once the initial signatures and documents have been submitted, there will be a waiting period when there’s not much the loan officer and the borrower can do. Even during that time, borrowers should not be afraid to check on the progress of their refinance. Checking in once or twice a week is pretty reasonable to make sure your refinance application is on track. Underwriters may ask for additional documentation once they get to your file, so it’s important to stay in touch with your loan officer and be diligent.

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Are mortgage rates going up?

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ARE MORTGAGE RATES GOING UP?

Minneapolis, MN: Mortgage interest rates jumped up last week, putting a scare in those sitting on the fence, thinking about refinancing, yet waiting form rates to drop a bit lower. Lucky for them, Minnesota mortgage interest rates moved back down slowly to about where they have been holding for some time.

The big question is how long can mortgage rates remain this low? 

Mortgage rates have been stuck at these amazingly low levels for the past five months. According to Freddie Mac weekly survey of mortgage rates, last week was the first time that interest rates on a standard 30-year fixed-rate mortgage rose above 4 percent, only to slip back below this week.
It’s very clear that mortgage rates can’t stay this low forever. It was big news when 30-year rates fell below the 5 percent mark in March 2009 – a level unimaginable just a few years before. Now we’re a full percent lower than that. When you consider that rates rarely fell below 7 percent prior to 2001, and often ranged much higher, it’s clear that rates will eventually move back toward more historical norms. When I bought my first house in 1981 – I paid 16% for an FHA 30-year fixed mortgage.
The question is, when will that happen – and what will trigger it?  So, is it smart to keep holding out for lower refinance rates? Probably not…  Is it wise to not buy a house today?  Probably not, especially with these interest rates and zero down programs like the VA loan program, and the USDA Rural Development Program.

New FHA Streamline Refinance Guidelines

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New FHA Streamline Refinance Rules

St Paul, MN:  Home owners with an existing FHA mortgage loan – rejoice. Washington has announced new guidelines to make it cheaper and easier for homeowners to refinance FHA mortgages. The reason is pretty simple – since FHA already backs your mortgage, they’re the ones who are on the hook if you default. So if refinancing will help make your mortgage more affordable for you, it makes sense for them to help.

The updated guidelines apply to FHA Streamlined refinancing, which is about as close to automatic loan approval as any refinance program can get. There are many variables to the program, but under the best circumstances, you don’t even need an appraisal, making it a great loan for underwater home owners.

Reduced FHA Fees

The changes announced dramatically reduce some of the fees usually charged for FHA mortgages and refinancing. FHA loans have two major mortgage insurance parts. The upfront fee, and the monthly mortgage insurance. For refinances starting June 11th 2012 and after, the current upfront fee of 1 percent of the loan amount is being reduced to a mere 0.01% – equal to $10 on a $100,000 mortgage – while the annual insurance premium is being cut by more than half, to 0.55 percent of the balance, down from 1.15 percent currently.

The administration estimates the reduced annual fee will save an additional $95 a month on a $175,000 mortgage, on top of the actual savings from refinancing to a lower mortgage rate.

Anyone can with an FHA mortgage can refinance at anytime, but to qualify for the reduce fees, you must have obtained your current FHA mortgage prior to June 1, 2009.

Home Lost Value?

The FHA streamline refinance option that does NOT require an appraisal is a great option for homes that have lost value. Homeowners can be underwater on their FHA mortgage (i.e., owing more than their home is worth) and still qualify for refinancing. In fact, there’s no limit on how far underwater a borrower can be and still get an FHA Streamline Refinance.

If you’re underwater, but have a second mortgage or HELOC (home equity line of credit)  – you’ll have additional challenges – so be sure to speak with a good licensed loan officer to determined your exact situation.

Bottom Line

FHA does not do loans. Lenders do loans that FHA insures. Although FHA has pretty generous guidelines for refinancing, it’s still the lender’s call on whether to refinance or not. Some lenders will have tighter guidelines, and some may even refuse to refinance a mortgage even if it appears to meet FHA requirements. The new guidelines remove some of the obstacles that sometimes make lenders reluctant to do an FHA streamline refinance, by taking such loans out of the formula used to assess their performance as FHA approved lenders. Since many of these mortgages are considered somewhat riskier than more recent home loans, some lenders have been reluctant to refinance them for fear of damaging their rating with FHA.

To see if you can obtain an FHA mortgage refinance, check with your local approved FHA mortgage lender.

SPREAD THE WORD WITH THE SOCIAL MEDIA LINKS BELOW

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HARP 2 refinance program in MN and WI

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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).

 

Who owns my mortgage loan?

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Who owns my loan?

Minneapolis, MN: Until recently, no one really needed to know, and no one really cared who ultimately owns their mortgage loan. Home owners receive their monthly statements, and make their monthly payments, to their mortgage company (or mortgage servicer).

With numerous program available to assist homeowners, including HARP 2, the Home Affordable Refinance Program, which require the loan be owned by Fannie Mae or Freddie Mac, it is very important to know who, and if they own your mortgage loan.

There are usually a few people involved in your loan process:

  • The Originator: The company who did the original loan. This could be a bank, broker, or direct mortgage company
  • The Servicer: The company now providing the statements and accepting the payments is only providing the service of billing, statements, customer service, etc. This company could also have been your originator.
  • The Investor:  This is usually not the company that provided the funds originally to make the loan, but a company that may hold your loan permanently, or sell it off to someone else, like Fannie Mae and Freddie Mac. Many times this company also becomes your loan servicer.
  • Actual Owner / End Owner: This could be a bank, mortgage company, or some kind of investor group. For a large number of homeowners, this is Fannie Mae or Freddie Mac.
Who owns my mortgage loan? – Click to find out

 Click here for a HARP 2.0 Lender in MN and WI

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