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Showing posts from September, 2015
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REFINANCING WITH HARP 2.0
The last time the Fed raised rates was way back in 2006. Since that time, rates have gradually fallen as the Fed has tried to get the economy kick started by gradually lowering interest rates over time. As rates fell, homeowners benefited with the lower rates by refinancing. By far, the most popular loan programs are those underwritten to standards issued by Fannie Mae and Freddie Mac, so-called “conventional” loans. Borrowers can literally save thousands when refinancing and lowering their monthly payment.
But a conventional refinance also has a requirement that homeowners discovered kept them from taking advantage of lower rates. That requirement is equity. To refinance an existing conventional loan, lenders want to see at least a 10% equity position in the property, or what lenders refer to as a 90% loan-to-value, or LTV. If the current market value for a property is $100,000, the newly refinanced loan cannot be greater than $90,000. As property values fell…
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THE FED STANDS PAT—NO RATE INCREASEAt the beginning of the year, there were gradual signs the economy was indeed on the mend. So much so that Fed watchers were expecting the first rate increase since 2006 as early as June. Yet the FOMC meetings in June came and went with no Fed action. Then July was the next target yet during the period from June to July economists were second-guessing themselves after additional economic data was released, primarily the report showing growth in the United States as measured by the Gross Domestic Product number actually contracting by -0.2%.

That apparently was a temporary setback as additional data began to once again cause economists to expect a rate move by the Fed and those expectations were bolstered by none other than Fed Chair Janet Yellen to announce that there will indeed be a rate increase in 2015. The Fed’s next round of FOMC meetings occurred last Thursday and once again, the Fed stood pat. Wall Street took the news hard and ended a fairly…
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HOW LENDERS VIEW YOUR QUALIFYING INCOME
One of the most important aspects of qualifying for a mortgage is affordability. Lenders are required to determine whether or not a borrower can afford a new mortgage payment, taxes and insurance in addition to current credit obligations. Lenders compare your gross monthly income with qualifying income to arrive at this number. However, not all income can be used. That said, how do lenders calculate qualifying income?
Unless you’re recently discharged from military service or just out of college or trade school, you’ll need to document at least two years of full time employment. This is accomplished by providing your two most recent W2 forms. In addition, lenders will ask for your most recent pay check stubs covering 30 days. The pay check stub will show both gross pay as well as year to date earnings. Lenders will compare the gross pay and year to date earnings to look for consistency. If the numbers don’t quite match up, be prepared to provide a…
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A HIGH COST HOME LOAN—WHAT YOU NEED TO KNOW
A high cost loan is one with higher mortgage rates and fees when compared to conventional or government backed home loans. A high cost loan is typically associated with a subprime loan but may also be a loan for someone with decent credit but for some reason may not otherwise qualify for a mortgage. A high cost loan and subprime loan really never had an official definition but last year the Consumer Financial Protection Bureau, or CFPB, laid out specific guidelines on whether or not a loan is considered high cost. These guidelines are in addition to those in the Homeowners Equity Protection Act, or HOEPA.
Lenders can issue high cost loans but the CFPB has defined what is considered high cost and what is not. A high cost mortgage is: A first lien that has an annual percentage rate that is 6.5% higher than the average prime rate, rates reserved for those who can qualify for a conventional mortgage.A loan is considered high cost if the loan is at …
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THE FHA STREAMLINE AND HARP—WHAT ARE THE DIFFERENCES?

The FHA streamline is a refinance program that allows borrowers to refinance an existing FHA loan with less documentation compared to the amount of paperwork involved when applying for the original FHA mortgage. HARP is the acronym for Home Affordable Refinance Program and has only been around for a few years while the FHA streamline has been a staple in the industry for quite some time but both the FHA streamline and HARP address the same issue: refinancing an existing mortgage when property valuations, credit or income is an issue.
For those with a conventional mortgage, one that is underwritten to guidelines prepared by Fannie Mae and Freddie Mac, a refinance requires at least a 10% equity position. The loan cannot exceed 90% of the current market value of the property. When property values fall below what is owed on the home, the borrower must either bring money to the table to lower the loan amount in order to refinance. But m…
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PRIME VS. SUBPRIME—WHAT’S THE DIFFERENCE?
The concept of subprime and prime mortgage loans is beginning to come back on the lending horizon. For a time, those years during and immediately following the housing debacle of the last decade, subprime loans vanished as did most of the lenders who made them. However, the term “subprime” itself was all too often applied to certain loan programs or borrowers inaccurately. What makes a loan subprime and how does a subprime loan compare to prime?

A loan marked “prime” is typically a mortgage loan issued to a well-qualified borrower. There is no official definition or one that is categorized by mortgage giants Fannie Mae or Freddie Mac, but a prime borrower is one with excellent credit, a sizable down payment and comfortable debt to income ratios. A prime borrower will typically be offered the lowest rates based upon down payment and credit scores yet that can be a moving target from lender to lender.

A subprime loan on the other hand is one tha…
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WHAT DO YOU NEED TO LOOK FOR IN A MORTGAGE LENDER?
Most people turn towards banks to get their mortgage, and often overlook other options like direct lender. Direct lenders can be a good choice for the borrower since they offer more flexible terms for a loan.

There are some mistakes you could avoid in choosing the right one. This is where knowing which lender is better for you will come in handy. Here are a couple things to look for while searching for the right lender:

THE INTEREST RATE  For starters, one trait of any good mortgage lender will be their low interest rates.  That being said, an interest rate isn’t everything, you also needs to look at other important factors such as, monthly payments, APR and so on. THE FEES  It is also important to note that there are other costs that come along with the mortgage as well, the fees that a mortgage lender charges will usually differ significantly. This is why the fee should be clearly explained. You can also find lenders who offer mortgag…
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UNDERSTANDING YOUR MORTGAGE RATE

Owning a home is one of the most important financial decisions of a person’s lifetime, which is all the more reason why you should fully understand how a mortgage works before you make a decision. The following tips will help you while taking out a mortgage for your home.

UNDERSTANDING THE NUMBERS A mortgage point is another approach to getting home financing. Mortgage points are the amount that is equivalent to 1% of the mortgage loan. For example, if you have taken out a mortgage loan out of $400,000, one point will be equal to $4000. There are also two kinds of points, Discount points and Origination points.

DISCOUNT POINTS AND ORIGINATION POINTS Discount Points or “rate buy-down” is used to "buy" an interest rate lower. These points lower the interest rate for the entire term of the loan. On the other hand, Origination points are charged to recover some costs of the loan origination process. For instance, your Loan Officer's compensat…
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THINGS YOU SHOULDN’T DO BEFORE REFINANCE
The housing sector is booming as home owners are taking advantage of low interest rates. But all this growth is making it even easier to drop the ball when refinancing a mortgage. The following are some of the things you should avoid doing while looking for a refi on your property.

DELAYING IN LOCKING A MORTGAGE RATE One of the most common mistakes made by home owners is that they delay locking a good mortgage rate. What you need to realize is that if rates rise high enough it could no longer be viable to spend the time and money on getting a mortgage refinance. It is also important to note that rate locks have an expiration date too.

RENOVATING BEFORE GETTING YOUR HOME APPRAISED All renovations should be done well before the appraiser is expected to visit your home. It is important to remember that an appraiser is there to deliver an estimate on the value of your home after an inspection. So, your home will be worth much less if there are holes …
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MORTGAGE RATES VS. APR — WHAT YOU NEED TO KNOW
Shopping for the right mortgage term can be confusing at times. One aspect which is particularly confusing is the two percentages that people often have to deal with. So, this is going to be a breakdown of a mortgage rate and an annual percentage rate or APR.
THE DIFFERENCE An interest rate is expressed as a percentage and is basically the cost that a person will have to pay every year to borrow the money. It is important to note that the interest rate does not reflect the fees or any other charges that one may have to pay for the mortgage loan.
On the other hand, an APR is a broader measure of what it will cost a borrower. The annual percentage rate does not only reflect the interest rate but also the points, fees of the mortgage broker and other charges that the borrower would have to pay in order to get the loan. This is the main reason why an APR always seems to be higher than an interest rate.
ALWAYS COMPARE APPLE TO APPLES While look…
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SHOULD I REFINANCE? IS THIS THE BEST TIME?










The falling mortgage rates means that it’s time to consider refinancing. According to reports, mortgage rates have continued to fall in the past few months with the average rate of a conforming 30-year mortgage hovering at around 3.74% at the start of the year. Rates for the conforming 5.1 adjustable rate mortgage averaged at 3.01%. For example, if you refinance a loan amount of $200,000 at a fixed 30-year rate of 3.74%, you would make 360 monthly payments of $925.10 (before taxes or insurances).

This break for homeowners comes from the investor’s concerns on the falling oil prices and the current deflation which has pushed bond yields even lower, consequently allowing mortgage interest rates to clip as well.

While many aspiring homeowners who wanted to refinance did have the opportunity in the past years, there are still plenty who stand the chance of doing so in the current scenario as well. It has been reported that around 7.4 million home…
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CONVERT LOAN TO FHA AND GET CASH OUT










A cash out refinance is basically a loan that pays for a current mortgage and gives the lender some extra cash to spend after all the loan costs have been paid off. Those who are thinking of getting cash out can do so with a cash out refinance with an FHA loan. FHA cash out refinance loans compare well with private refinance mortgages by offering a lower interest rate along with cheaper closing costs.

IS IT FOR YOU?  First off, you need to be certain if a cash out refinance option is suitable for you. Refinancing a mortgage rather than just applying for a second mortgage makes sense if the homeowner plans to live in their current home for a long period. So, if the refinanced mortgage has a low interest rate than the current mortgage, it could cover the cost of refinancing in the long run. Before jumping into the decision, calculate how long you wish to stay in your home after a refinance, before it starts paying for itself and you get to save some …