About Government Refinance and Home Purchase Programs

The FHFA, the organization responsible for the Home Affordable Refinance Program (HARP) recently announced that the HARP program will be extended another year and is now set to expire June 30, 2012 rather than that same date this year.

The HARP program is designed to help people with conventional mortgages backed by Fannie Mae or Freddie Mac refinance to lower interest rates even if the value of their homes have dropped. With a HARP loan a conventional mortgage can be refinanced at up to 125% of the current value of the home. This is obviously useful to people who are underwater on their mortgages, but the program is also very useful to people who owe 80-100% of the current value of their home because with the HARP program borrowers can refinance to a lower Fannie/Freddie loan without having to add mortgage insurance.

Contact us in the sidebar to learn which programs will best assist your family.

Thanks to the efforts of the federal government mortgage interest rates are still near historic lows. But over the last week or two rates have begun inching upward again. This may, ironically, be partially due to the positive employment news that has been surfacing recently.

The good news is that rate are only inching higher lately rather than rocketing higher. It is inevitable that we will eventually see 30-year mortgage rates at more than 6% like we saw just a few years ago — it is only a question of how long before that happens. When rates increase like that many people with adjustable rate mortgages will see their payments go up by hundreds of dollars per month. But in the meantime rates are still very low.

If you have an adjustable rate mortgage or if you have a fixed rate mortgage that is higher than you want, contact us in the sidebar right away before interest rates get much higher. One of our counselors can point you in the right direction to take advantage of the government-backed refinance programs that are available.

The recent budget compromise reached in Washington DC that prevented a government shutdown had a direct effect of government-backed mortgages. The FHA program is an entirely government program so a government shutdown could have put a real crimp in the FHA mortgage originating and closing process. Thankfully, cooler heads prevailed and FHA loan proceed without interruption.

All FHA loans started on Monday April 18th, 2011 or later will have higher monthly mortgage insurance fees than loans started the previous Friday. The FHA is raising its monthly mortgage insurance fees by 0.25% across the board beginning then. The fees will not be retroactive but will apply to all new FHA refinances or purchase loans.

Here is what a 0.25% mortgage insurance fee would mean:

On a $150,000 30 year fixed FHA loan the monthly insurance fees will cost an additional 0.25% per year. That means the insurance fee would be $31.25 per month higher than the same FHA loan started the previous week. ($150,000 x .25% / 12 = $31.25). On a $250,000 FHA loan the mortgage insurance fees would jump $52.08 per month.

So these fee hikes can be significant and the larger the loan the more of a difference the change will make. If you have considered an FHA loan or if you already have an FHA loan you would like to streamline to a lower rate it would be wise to at least start an FHA loan application by Friday April 15 in order to avoid mortgage insurance fee hike. Contact in the sidebar for details on how to get started.

If you have an FHA mortgage with a rate at 5.5% or higher we recommend you contact us in the sidebar. Mortgage interest rates are hovering near their historic lows still and people with FHA loans are eligible for a “streamline refinance”. A streamline allows FHA loan holders to reduce their interest rates significantly without having to get an appraisal or even prove income and assets in most cases. Plus closing costs for FHA streamlines are usually paid for by an FHA-approved lender rather than rolled into the new loan.

But FHA streamlines will become more difficult to utilize in mid-April when the FHA is planning to increase mortgage insurance rates across the board for all FHA refinances. So if you have an FHA loan you will probably benefit by starting the refinance process before about April 18th. After that date all FHA refinances will come with higher fees. Contact us about this FHA streamline program in the sidebar.