About Government Refinance and Home Purchase Programs

As the European debt crisis slogs along, mortgage interest rate in the US continue to test new lows. Unfortunately the number of borrowers who are able take advantage of the record low rates seems to be shrinking. While borrowers who have equity, solid credit, and enough income can still refinance to the record low rates through authorized lenders on our list, it is becoming more difficult for borrowers who are underwater on their mortgages to refinance. Fewer and fewer lenders are participating in the main refinance programs targeted toward underwater borrowers, the FHA streamline program and the HARP program. Part of the problem is lenders are leery about adding new upside-down mortgages to their books. The launches of the new FHA streamline program and the HARP program have sent many thousands of underwater borrowers in search of refinances from these programs and as a result of the popularity of these programs many banks simply have lost their appetite for funding such loans. If the problem persists the federal government might have to come up with greater incentives for lenders to participate in these programs because the programs will not do any good if none of the authorized lenders are willing to participate.

The good news is that some authorized lenders are still participating in both programs and it is still possible to get an FHA streamline or a HARP loan… for now. But with the retreating we are seeing among most authorized banks recently there is not telling how long both programs will be available. The HARP 2 program is already available among so few lenders that in many cases where the home is significantly underwater borrowers are looking at waits of three or more months to close their HARP 2.0 loan. With any luck the FHA and Fannie/Freddie will step up to make these programs more appealing and less risky for lenders soon.

In the meantime, contact us in the sidebar today to learn more about which programs are the best fit for your family. All of the government-backed refinance programs are still available for now so getting going now while rates are testing new lows is probably a very good idea.

As we have discussed in the past, the new FHA streamline program that went live June 11 is hugely beneficial to families who have FHA loans that are more than three years old. Well the expected stampede to participate in the new program is underway and several large FHA-approved lenders have decided they need to place limits on the number of FHA loans they are refinancing and servicing. The end result of this pullback by banks is likely to be that FHA streamlines will soon have higher interest rates and will be harder to come by. If you have an FHA loan that is more than three years old contact us in the sidebar right away. From the looks of things this new program with the record low interest rates might be much harder to get in the next few days.

The much-anticipated new FHA streamline program for people who have FHA loans that were started prior to May 2009 goes live Monday June 11th. With interest rates testing all time lows this new program is a good idea for virtually every home owner who qualifies. Not only can the interest rate be lowered to somewhere between 3.75% and 4.0% right now, this new program adds nothing to the loan amount and normally allows borrowers to skip at least one mortgage payment. The other benefit of the FHA streamline program is that it doesn’t matter how underwater borrowers are on their current FHA mortgage as long as there are no 30-day late payments in the last 12 months. Add to that the fact that borrowers will also receive a refund check for the amount in their current escrow account and there is no downside at all for most qualified borrowers. Again this program only applies to people who already have FHA loans that are more than three years old. But for that segment of the population taking advantage of this new program is the proverbial “no-brainer”.

Be ready for longer than usual closing waits with this new program though. Because the new program is so beneficial to qualified borrowers millions of homeowners will be seeking these FHA streamlines this summer. Folks who get started right away should expect to close their streamline loan in July. But plan for about six weeks for the refinance process in June and July until the initial rush dies down.

If you have an FHA loan you got prior to May 2009 contact us in the sidebar right away to get an estimate on this new FHA streamline program. If not, you can still contact us to learn more about other available government-backed refinance programs.

A few weeks ago we reported that the latest flare up in the European debt crisis was causing mortgage interest rates (on both government-backed loans and conventional loans) to approach record lows. Since then the anxiety over Europe’s economy has deepened and the recent jobs report in the US was much worse than expected. Those developments have sent many global investors fleeing back to the safe haven of US treasuries. And that in turn has led to new record lows on mortgage rates in the last few days.

We are getting reports from several authorized lenders that borrowers with good credit have been getting FHA streamline loans at around 3.75% in the last week or so. Likewise borrowers with plenty of equity and good credit are getting conventional refinance loans through Fannie Mae and Freddie Mac in the high 3’s. Borrowers who are significantly underwater on their Fannie/Freddie loan and thus are participating in the HARP 2.0 program are still getting rates in the mid 4’s but that is still often saving hundreds of dollars per month.

Contact us in the sidebar right away for guidance on the best program for your situation. These record low interest rates are a temporary thing so the sooner you can get started and lock a rate in the better.