About Government Refinance and Home Purchase Programs

The FHA announced yesterday that it will be increasing its monthly mortgage insurance fees by 0.25% on all products in April of 2011. This comes on the heels of other recent changes the FHA has made in order to strengthen its financial position in the face of the foreclosure crisis of the last several years.

What does a 0.25% increase in monthly mortgage insurance mean? Well on a $100,000 mortgage that equals an additional $250 per year or about $21 per month. On a $200,000 loan that is $500 per year or $42 per month. And so on. The rate increase also means that if you have an FHA loan now and were hoping to streamline it to a lower rate you should try to get that done immediately because the new, higher FHA mortgage insurance rates will apply to the new loan starting in April and those higher PMI payments could mitigate a lot of the savings that come from lowering the interest rate.

Contact us in the sidebar right away to learn more or get an estimate.

The Treasury and Obama Administration released the the first iteration of their plan to wind down government-sponsored mortgage behemoths Fannie Mae and Freddie Mac. The plan was not earth shattering by any means. The basic ideas in it are to slowly wind down the involvement of Fannie and Freddie in the mortgage market by about 10% per year over the next few years. It also recommends reducing the loan limits on government-backed loans this Fall. Here are some excerpts from the recent HousingWire article on the subject:

The administration’s plan, sent to Congress by the Treasury Department, calls for continuing to wind down of the GSEs investment portfolio at an annual rate of no less than 10% per year.

The Treasury also wants to see 10% down payments from potential borrowers. …

“This is a plan for fundamental reform – to wind down the GSEs, strengthen consumer protection, and preserve access to affordable housing for people who need it,” said Treasury Secretary Tim Geithner. “We are going to start the process of reform now, but we are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market.” In a conference call Geithner predicted a 5 to 7 year timeline for implementation.

Despite the recent wave on news on rising mortgage interest rates, the interest rates on most government-backed mortgages are still startlingly low by historical standards. But all good things must come to an end and it is not unlikely that rates will bounce significantly higher soon. For folks who have an adjustable rate mortgage (ARM) now, rising rates overall will mean monthly mortgage payments could start shooting up soon.

If you have an adjustable rate mortgage — whether that is on a first or a second mortgage — and have been thinking about looking into a fixed rate mortgage it is definitely time to stop procrastinating. Contact us in the sidebar right away to learn which programs best suit your situation.

Recent reports show housing prices in the US continuing to drop. We get this from a recent HousingWire report:

December home prices fell 5.4% from a year ago, the fifth straight month of declines, according to data provider CoreLogic.

The decrease was steeper in December than the revised 4.39% drop in November. For all of 2010, though, home prices showed no change from the year before and some signs of stabilization. From 2008 to 2009, home prices fell 12.7%. CoreLogic Chief Economist Mark Fleming said 2010 was a year of volatility with the expiration of the homebuyer tax credit.

“It was a bumpy ride which ended with a net gain/loss of zero. Despite the continued monthly decline in home prices and year-over-year depreciation, we’re encouraged that on an annual basis we’re unchanged relative to a year ago,” Fleming said. “Excess supply continues to drive prices downward, but the silver lining is that the rate of decline is decelerating.”

If you still have any equity in your home it is much easier to refinance to a better mortgage rate than if you are significantly underwater. If you would like to improve your mortgage situation contact us in the sidebar to see which programs apply to your family right away before housing prices slide further.

With the economy showing signs of life lately mortgage interest rates have slowly been creeping higher. While it is still possible to get a 30 year fixed government-backed mortgage at below 5% that window of opportunity may be closing quickly.

While rising interest rates will be met with rejoicing among savers and investors, they are not desirable to folks looking to refinance their mortgages or people who have adjustable rate mortgages now. If you have considered getting an estimate on a refinance to a lower interest rate contact us in the sidebar right away. We may be looking at the recent record low rates through the rear view mirror as soon as this Spring.

One of the foreclosure prevention ideas that has been kicking around Washington DC in recent years is the so-called “right to rent” plan. Basically, the idea is that the government could give the right to homeowners to rent their homes back from the bank after a foreclosure and thus not be evicted. We get the following from a recent Huffington Post article:

At the moment, though, it’s unclear whether or not a “right-to-rent” plan has enough support in Washington.

“While we continue to review this concept, we have found several challenges that we believe would limit this type of assistance from making any significant impact in the market,” David Stevens, Federal Housing Administration Commissioner, wrote in an email. “Although we are not currently pursuing this option, the Obama Administration continues to work toward reforming the housing finance system and the mortgage servicing system in a way that puts consumers first and helps keep more Americans in their homes.”

But while the right to rent idea doesn’t have much traction, several other programs are up in running. Contact us in the sidebar to learn about which programs best apply to your situation.

Homeowners over the age of 62 are eligible to look at a government-backed loan product called a reverse mortgage. There was a good article recently over at CNNmoney.com on the subject. Here are a few excerpts:

A reverse mortgage can be a good way for people 62 and older to turn their home equity into extra spending cash that can supplement Social Security and withdrawals from savings, making retirement more enjoyable than it otherwise might be.

Typically, you can take the loan proceeds in a lump sum, monthly payments for life, as a credit line or a combination of these.

One of the big appeals of this type of arrangement — as opposed to, say, tapping your home equity by refinancing or opening a home equity line of credit — is that you don’t have to repay the loan until you die or move out of your house.

Another plus is that the payments you receive from a reverse mortgage don’t affect your Social Security benefits (although they could affect your eligibility for programs like Medicaid and Supplemental Security Income, or SSI, the program that provides income to people with low incomes and disabilities)

Keep in mind that you need to have a decent amount of equity in your home to be a candidate for a reverse mortgage. If you would like to learn more about reverse mortgages just fill in the contact form on the right and one of our counselors with follow up with you.