About Government Refinance and Home Purchase Programs

There was an interesting article over at Forbes recently titled “All-Time Low Mortgage Rates: Time To Refinance?”. Here are some highlights:

Your breakeven period is one of the most important considerations in a refinance. To determine your breakeven period, you need to look at the monthly savings you’ll create by refinancing and the total cost to refinance your loan. Let’s say that by refinancing, you’ll save $200 a month, and that the cost to refinance is $4,800. To determine your breakeven period, divide your refinance cost by your monthly savings. In this example, the breakeven period would be 24 months, or two years.

If you plan to stay in your house for longer than the breakeven period, refinancing might make sense. Now, if you’re only planning to stay there for 26 months, will that $400 you save be worth the time and hassle of going through the refinancing process? Maybe not. But if you’re planning to stay in the house for another 10 years, the refinance would save you $2,400 a year for eight years, or $19,200 (less the cost of the refinance).

Contact us in the sidebar in order to find out if you can qualify for a refinance. If you can qualify for a refinance we can help you get the estimates/information you need to figure out your breakeven point.

There have been some speculations that interest rates on government-backed mortgages could creep even lower this coming week. A writer over at BankRate.com said the following:

For the fourth week in a row, we are going to set a record for the lowest rate in the nearly 25-year history of Bankrate’s weekly mortgage survey.

Last week the 30-year fixed averaged 4.75 percent in Bankrate’s survey. When the survey is conducted today, I expect it to fall to around 4.66 percent.

Contact us in the sidebar right away if you would like to refinance to a lower interest rate while such rates are still available.

The new financial reform law includes a provision that is specifically designed to provide relief to homeowners who have lost their jobs. We get this from a recent MarketWatch piece on the subject:

More help is on the way for unemployed homeowners struggling to make their mortgage payments, thanks to funding tucked into the financial reform legislation signed by President Obama on Wednesday.

Although the U.S. Department of Housing and Urban Development hasn’t released the details of exactly how the $1 billion emergency homeowners’ relief fund will be distributed, legislation dictates that the program start by Oct. 1.

HUD is reviewing the language to determine the best method of implementation, said Lemar C. Wooley, a HUD spokesman.

The bill also includes $1 billion for redevelopment of abandoned and foreclosed homes.”

Fill in the contact form on the right to learn more.

There was a news release recently outlining some of the details of the new help for unemployed borrowers program. Here are some of the highlights:

By August 1, all mortgage servicers participating in the Making Home Affordable Program will offer extra help for homeowners struggling to make their monthly mortgage payments because of unemployment. The Unemployment Program will offer homeowners a forbearance period to temporarily reduce or suspend their monthly mortgage payments while they seek re-employment.

The minimum forbearance period is three months, although a mortgage servicer may extend it depending on the investor and regulator guidelines. If a homeowner becomes re-employed in that time, the forbearance period will end and the homeowner will be evaluated for a mortgage modification under the Making Home Affordable Program. Unemployment benefits will no longer qualify as income for the mortgage modification program.

During the forbearance period, a homeowner’s monthly mortgage payment must be reduced to no more than 31 percent (or less) of their gross monthly income. The servicer can decide to temporarily suspend payments in full. The payment amount and due dates will be decided by the servicer depending on investor and regulator guidelines.

To qualify, a homeowner must meet the following eligibility criteria:

* The mortgage must be a first lien mortgage, originated on or before January 1, 2009, and the unpaid principal balance must be equal to or less than $729,750 for a one-unit property.
* The property must be the homeowner’s principal residence.
* The mortgage has not been previously modified through a Home Affordable Modification.
* The homeowner was ineligible for a Home Affordable Modification.
* The homeowner is either behind on payments (but not by more than three consecutive months) or it is reasonably forseeable that the homeowner will fall behind.
* The total monthly mortgage payment is greater than 31 percent of the homeowner’s gross monthly income. If the payment is less, it is up to the servicer’s discretion if they will offer the program to the homeowner.
* The homeowner will be unemployed at the start of the forbearance period, and is able to document this because they will be receiving unemployment benefits in the month the forbearance period begins (even if the benefits expire before the forbearance period ends).

A mortgage servicer may require that, based on investor and regulator guidelines, homeowners have received at least three months of unemployment benefits before they begin a forbearance period.

There is no cost to apply to the Unemployment Program, although late charges may accrue while the homeowner is being evaluated for the program or in the program. A mortgage servicer may not collect late charges from the homeowner while they are still in the forbearance period.

Servicers may not initiate foreclosure proceedings or conduct a foreclosure sale while a homeowner is being evaluated for the Unemployment Program or in the forbearance period.