World Events Spark a Short-Term Drop in Home Loan Rates

Is this the last opportunity to purchase or refinance at bargain home prices and rates which are at record lows?

For the past several months, rates have been rising from the historically low levels they reached during the second half of last year. These rates presented a great opportunity for homeowners to refinance their home loan. It was even a better opportunity for those who were interested in purchasing their first home, an investment property or trade up. With bargains available, purchasing made so much sense for those who see real estate as a long-term investment and more importantly a better life for their family.

Rising rates were not bad news for the state of our economy. The rates were rising because the economy is recovering and that is very good news. Evidence of a recovery is all around us. Just last week, CNN indicated that rents are about to rise precipitously and one must ask whether the recovery of the home purchase market will be next….

“Already, rental vacancy rates have dipped below the 10% mark, where they had been lodged for most of the past three years. “The demand for rental housing has already started to increase,” said Peggy Alford, president of Rent.com. “Young people are starting to get rid of their roommates and move out of their parent’s basements.” By 2012, she predicts the vacancy rate will hover at a mere 5%. And with fewer units on the market, prices will explode. Rent hikes have averaged less than 1% a year over the past decade, according to Commerce Department statistics, adjusted for inflation. Now, Alford expects rents to spike 7% or so in each of the next two years…”

 

World events, especially the tragedy in Japan, have caused a short-term drop in home loan rates just as the economy is heating up. This means that you now can purchase or refinance a home at the lowest rates in months. According to the Freddie Mac Weekly Survey, rates have dropped over 0.25% in the past several weeks. Rates on 15-year fixed home loans are the lowest they have been since December. This lower rate equates to an approximately $500 in annual savings in interest on a $200,000 mortgage.

How long will rates stay low because of this crisis? No one can tell. But if you missed out on refinancing or purchasing last year, this could be your opportunity. Today, those who hesitate may be missing a very historic opportunity. Home affordability is the lowest it has been in our generation. Those who have a lot of money have been picking up bargains for the past year. Why? Those who are successful stay ahead of the trends. These lower rates mean that everyone can take advantage of this occasion to own the home of their dreams or reduce their payment on the home they already own. With gas prices up, wouldn’t the savings help?

Contact me quickly as we expect to be plenty busy this week with those who recognize the significance of the timing.

-Seth

Maine Mortgage Loans up to $1.5 Million

  • No adjustments to rates for loan amounts of $50,001 to $1,000,000
  • $800,000 up to 90% LTV

Only .20% adjustment in rate for loans over $1,000,000

  • Cash out available
  • No mortgage insurance

Service you can count on from a Maine Mortgage Banker.

Gov’t launches plan to help “underwater” borrowers

WASHINGTON – The Obama administration is trying to jump-start its sputtering attempts to tackle the foreclosure crisis with an effort to assist homeowners who owe more on their properties than their homes are worth.

The Federal Housing Administration will allow lenders to give these borrowers refinanced loans if the lender agrees to forgive at least 10 percent of the original mortgage amount.

The plan, which was announced in March, is being made available starting Tuesday.

The FHA said in a document published last month that between 500,000 and 1.5 million homeowners are projected to be helped.

However, the Obama administration’s previous efforts to stem foreclosures have fallen far short of expectations. Analysts at Barclays Capital estimated last month that the refinancing program would only aid between 200,000 and 300,000 homeowners.

As of the end of June, there were 11 million U.S. homes, or 23 percent of those with a mortgage with so-called underwater mortgages, according to real estate data provider CoreLogic.

Refinance your Maine home with under water equity?

Many homeowners who have seen a loss of value in their home have been seeking principal reduction plans or underwater refinancing opportunities to make their underwater mortgage more affordable. Obviously, homeowners who are in a situation where they owe more on their home than their home is actually worth are quite frustrated and, for those who are having trouble making their mortgage payments, are in need of underwater assistance.

A critical part of Fannie Mae’s role in the Making Home AffordableSM Program is the Home Affordable Refinance Program (HARP), available for refinances of existing Fannie Mae loans only. The goal of the refinance effort, as announced by the President, is “to provide access to low-cost refinancing for responsible homeowners suffering from falling home prices.” The expectation is that refinancing a Fannie Mae loan will put responsible borrowers in a better position by reducing their monthly principal and interest payments or moving them from a more risky loan structure (such as interest-only or short-term ARM) to a more stable product. These solutions provide mortgage refinances for current LTVs up to 125 percent, and mortgage insurance flexibilities.

Fannie Mae provides two Refi Plus™ options to provide Fannie Mae to Fannie Mae refinance solutions to eligible borrowers:

Refi Plus for manual underwriting

Refi Plus simplifies the process of refinancing loans that are already in a lender’s servicing portfolio. This product supports a 125 percent maximum LTV and mortgage insurance flexibilities for LTVs over 80 percent.

DU Refi Plus™ for loans underwritten through Desktop Underwriter® (DU®)

DU Refi Plus provides increased efficiencies for the origination and underwriting of Fannie Mae to Fannie Mae limited cash-out refinance transactions in DU up to 125 percent LTV. Eligible loans identified in DU receive increased underwriting flexibilities, including expanded eligibility criteria and DU minimum documentation requirements.

In today’s ever changing market it is important to work with a Maine Mortgage Specialist that can provide you with all of the options needed to refinance your existing home mortgage.

Call today to explore your options.  888-775-4200 ext 271.

What documents are needed for your Maine Home Loan?

Document Checklist and Instructions

A properly documented loan application makes your loan process go smoothly. This checklist will help you gather your paperwork.

Complete and sign the residential loan application, Form 1003, and the attached loan info sheet, credit authorization and fair lending notice. Page 4 of the application is a continuation page in case you need additional space for your assets or liabilities. If you make a mistake while filling out the application cross it out, and make a change. Do NOT use whiteout.

If you are salaried: provide W-2’s for the previous two years and one month of paystubs. If you are self-employed, provide tax returns for the previous two years, including all schedules, and a YTD profit and loss statement. (Note: provide copies of all requested documents. Do not provide original documents.)

If you own rental property, provide recent rental agreements and tax returns for the previous two years, including all schedules.

To speed up the approval process, provide bank statements for the most recent three months, and recent statements for stock, mutual funds and IRA/401K accounts.

If you are requesting a cash out refinance, provide a letter explaining how you will use the refinance proceeds.

If applicable, provide a copy of your divorce decree and settlement agreement.

If you are NOT a US citizen, provide a copy of your green card (front & back). If you are NOT a permanent resident provide a copy of your H-1 or L-1 visa.

If any borrower has filed bankruptcy, provide the Discharge Notice, Filing and Schedule of Creditors.

If you are applying for a home equity line of credit or loan (second loan), also include your first mortgage note. (This should be with your closing loan documents.)

By providing all documentation early, you make your mortgage specialist job much easier and ensure there are no  issues before closing.

How can you remove your PMI on your Maine Home Mortgage Loan?

PMI REMOVAL

Private Mortgage Insurance or PMI is the supplemental insurance that many lenders ask home buyers to purchase when the amount being loaned is more than 80% of the value of the home. Very often, this additional payment is folded into the monthly mortgage payment and is quickly forgotten. This is unfortunate because PMI becomes unnecessary when the remaining balance of the loan – whether through market appreciation or principal paydown – dips below this 80% level. In fact, the United States Congress passed a law in 1998 (the Homeowners Protection Act of 1998) that requires lenders to remove the PMI payments when the loan-to-value ratio conditions have been met.

Many appraisers offer a specific service for home owners that believe they have met the 80% loan-to-value metric. For a nominal fee, the appraiser can provide you with a statement regarding the home value. Some will even take the next step and help you file a challenge with your maine mortgage company. The costs of these services are very often recovered in just a few months of not paying the PMI.

If you would like more information on removing your PMI please contact me anytime.