About Government Refinance and Home Purchase Programs

The morning after the general election yielded a pleasant surprise for folks looking into refinancing their mortgage. Purchases of mortgage-backed securities skyrocketed. That means interest rates on government mortgage programs have dipped in response. Mortgage interest rates broke new record lows earlier this fall when The Fed announced a long term program to buy mortgage backed securities to help keep mortgage interest rates low. With President Obama winning the election two things happened to help investor confidence: 1) The uncertainty about who the president would be was removed and 2) The threat of Ben Bernanke being fired by Mr. Romney went away. No doubt those uncertainties being settled has bolstered investor confidence in the short run.

What that means for now is mortgage interest rates could be testing new lows over the next several weeks. If you have been considering investigating a refinance (even if you have already refinanced your mortgage in the past) now is a very good time to contact us in the form on the right to get more info and an estimate on the government-backed refinance programs that are available.

Buried in a recent report from HUD was a minor bombshell of an announcement. Because of an ongoing shortfall in the FHA/HUD funds, in 2013 the FHA is likely to once again increase both the upfront mortgage insurance premium and the monthly PMI fees on new FHA loans. That announcement is big news by itself, but the bigger news is the possibility that the monthly PMI may be for the life of the the loan on new loans, rather than being for a minimum of five years like they are now.

Here is what the HUD report said:

While FHA’s 100% insurance guarantee remained in effect for the 30-year life of a loan, borrowers were only required to pay premiums for less than ten years, FHA has been left without premiums to cover losses on loans held beyond the period for which it collects premiums. This change will apply to new loans.

This change will make a massive long term difference to borrowers with FHA loans.

In the last few months rates on FHA loans have been at shockingly low rates. It has not been uncommon to see low-cost or no-cost FHA streamlines to new 30 year fixed FHA loans at rates in the mid to low 3’s recently. If you or someone you know has an FHA loan currently, contact us in the sidebar right away to look into getting an FHA streamline started while rates are still scraping all time lows and before this major change in the FHA mortgage insurance rules is implemented.