Posts Tagged ‘refinance’

Refinances available up to 125% LTV

March 12, 2010

Over the past several months, I’ve had the privilege of helping home owners refinance their home using the Making Home Affordable Program. The design of the program allowed home owners to refinance their home even if they were underwater on their mortgage.

Initially lenders only allowed home owners to refinance up to 105% LTV (Loan To Value – determined by the current mortgage balance versus the appraisal value of the home).

Fortunately, we are now able to offer home owners the opportunity to refinance up to the Making Home Affordable Program’s maximum limit – 125% LTV

The question now becomes, “do I qualify?” Let’s find out!

  • The current mortgage cannot have Private Mortgage Insurance. Why? While the program allows up to 125% LTV, private mortgage insurance companies are not currently insuring loans with that high of an LTV. If the current mortgage has PMI, sad to say, I coudn’t help with a refinance.
  • If there is a second mortgage, it may prevent being approved for a refinance. Why? The second mortgage can’t be paid off in the refinance, so the second mortgage would need to be subordinated behind the new first mortgage. If the home is underwater, there is a good chance the second mortgage company will not approve the subordination behind the new mortgage.

For more information on second mortgages and how they can stop a refinance dead in its tracks, see this recent post from one of my colleagues.

If the current mortgage does not have PMI and there is no second mortgage, there is only one thing left to check.

  • The Making Home Affordable Program only applies to mortgages owned by Fannie Mae or Freddie Mac. So, who owns your mortgage? To find out, search for your mortgage using Fannie Mae’s online loan lookup tool. If not found, try Freddie Mac’s online loan lookup tool.

In short, if your mortgage does NOT have PMI, you don’t have a second mortgage, and the first mortgage is owned by Fannie Mae or Freddie Mac, you are eligible and I can help you refinance!

Let’s get started now talking about details, options, qualifying rates, etc. while we are still enjoying these historically low interest rates.

is the (low mortgage rate) party over?

February 9, 2010

The party is just getting started in New Orleans (Super Bowl win + Mardi Gras = month long celebration), but it may soon be coming to an end for historically low rates.

Enjoy it while you can!

Mortgage rates hit historic lows in 2009 thanks to the extraordinary efforts of the Federal Reserve.  Back in November 2008, the Feds announced a program to buy mortgage backed security (MBS) bonds.  The reasons were two fold:

  • to help push mortgage rates lower to stimulate the real estate market
  • to create a market (or in other words, increase the value) of MBS bonds for others to buy

When the plan was announced by the Feds in November 2008, interest rates dropped roughly a half point in one day!  As the Feds began buying bonds, rates dropped down to their historic lows. The initial plan was to buy bonds through the first six months of 2009. It was extended through 2009, and extended again through end of the first quarter 2010.

At their recent meeting, the Feds reiterated their intentions to “seamlessly exit” the MBS bond market with no hint at another extension to the MBS bond buying program.  The question now is “what happens to mortgage rates?”  Take a look at the chart below.

Since mortgage rates dropped significantly on the announcement of the plan, and then continued to improve to historic lows as the Feds purchased MBS bonds, one would logically expect the opposite reaction once the bond buying program comes to an end.  In this case, and at least to some degree, interest rates should rise.

How should you proceed? Anyone who hasn’t refinanced OR is waiting until the deadline to take advantage of one of the home buyer tax credits, go ahead and get prequalified today.  Move forward with the loan now while rates are still ridiculously low.

There is not guarantee rates will dramatically increase, but also no guarantee they will stay the same.  Take advantage of the market and low rates while they are still available.