About Government Refinance and Home Purchase Programs

For the few years following the housing market crash in 2007 cash out refinances became a rarity. First, the number of homeowners with enough equity to get cash out dropped dramatically. Second, lenders tightened their standards on cash out refinances. But as we press forward toward 2014 cash out refinances are making a comeback. Housing values have been increasing significantly in many parts of the country and that has opened the door for families to get some cash out to make home improvements, pay off credit cards or other expensive debts, or pull some money out for a variety of other reasons.

The lending standards for cash out refinances remain relatively tight but homeowners with enough equity can still take advantage of cash out refinances while rates remain historically low. The FHA allows for cash out refinances of up to 85% of the current appraised value of a home and the loan limit is 75% for most conventional cash out refinances.

Life is always full of surprises and sometimes an infusion of cash is needed. If you have equity in your home and would like to learn more about the FHA cash out refinance options or others contact us in the form on the right today. One of our counselors can point you in the right direction.

The FHA announced yesterday that it will shorten the waiting period requirements for borrowers who declared bankruptcy or lost a home to foreclosure or a short sale. This is big news for borrowers who were told they had to wait three or more years after a bankruptcy or losing a home to purchase another home or refinance their current mortgage. The FHA says it will require documentation that the financial distress was caused by extenuating circumstances beyond the control of the borrower. Further, borrowers must demonstrate they have been in good standing with creditors for the last 12 months to be approved for a new FHA mortgage. Here is an excerpt from the FHA Mortgagee Letter 2013-26:

As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively affected. FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.

To that end, FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that:

– certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control;
– the borrower has demonstrated full recovery from the event; and,
– the borrower has completed housing counseling.

If you have suffered through a bankruptcy or the loss of a home and were told you had to wait several years to buy another home or refinance your mortgage contact us in the sidebar today. The FHA just made getting a better mortgage easier.

It appears the Fed Chairman has had enough of people reading his mind. For the last couple of months markets have been betting that the Fed was planning to stop pouring so much money into the system sooner rather than later. That assumption caused mortgage interest rates to spike since May. But in the last week or so Fed Chairman Ben Bernanke has made several comments that make it clear that he has no intentions of taking his foot off the gas any time soon.

The Fed wants to see unemployment below 7% along with signs of steady sustainable growth in the economy. Speculations about the end of “QE2”, the policy of the Fed buying $85 billion of US treasuries and mortgage-backed securities every month, caused a pretty significant disruption in the markets over the last couple of months. The disruption apparently has gotten bad enough now that Bernanke is seeking to put an end to it. That is good news for mortgage interest rates in the short run. We probably won’t hit all time lows in rates again but the odds of rates continuing to move higher for the next few months look slimmer now than they did before Bernanke made his recent comments.

Rates are still very low by historical measures and hopefully they will stay this low for a couple of months. Contact us in the sidebar now to learn more about the excellent government mortgage programs available.

In a roundtable discussion with the folks over at Zillow today, President Obama gave some hints that HARP 3.0 might still be a possibility. We get the following quotes from a recent HousingWire article on the event:

The next question that came in to the president asked if there was hope for HARP 3 — a topic that, according to Rascoff, made up about 30% of all the questions submitted — to which the president replied “there should be hope.” According to Obama, HARP 3 was an idea that was strongly support by Mitt Romney’s team, and is something Democrats and Republicans can get together and get done, the president added. …

Finally, someone asked what help is available for homeowners looking to refinance but who don’t have a GSE-backed loan — somehow bringing the virtual roundtable full circle as the president said this is where the HARP 3 program comes in. Keep in mind, this would be good for the entire economy, Obama added. With the extra money saved after refinancing, many homeowners would likely be able to buy that new car they need or finally purchase their children a laptop for school.

The president concluded by encouraging everyone listening to contact their local congressman and voice their support for HARP 3.

HARP 3 is the name given to to the idea of the government opening up a refinancing program for homeowners who are underwater or at least have less than 20% equity in their homes now. Currently, only homeowners who are already in a mortgage backed by Fannie Mae, Freddie Mac, FHA or VA are able to refinance when they have no equity. HARP 3 would open the refinancing option to many more borrowers.

It doesn’t sound like HARP 3 is imminent but the fact that the president is talking about it and asking voters to contact their congressional reps about it is encouraging. Bookmark our site to check back for the latest HARP 3.0 news. And contact us in the sidebar to learn what programs are available already.

With the possibility of the Fed pulling back on it’s “QE3” stimulus program looming, mortgage interest rates are poised to bounce higher again soon. The Fed has been compressing interest rates since 2009 in an effort to spur the US economy. As the economy has shown signs of improvement this year the likelihood of the Fed pulling back on its stimulus has increased. In anticipation of the Fed pullback there has been an increase in interest rates since May.

Rates are still very low by historical standards but they will probably be significantly higher in the months and years to come. If you are considering buying a home, refinancing to a lower rate, or refinancing out of an adjustable rate mortgage (ARM) into a fixed rate, contact us today. Rates will likely be trending up for quite a while from here so the time to get started on a new mortgage in now.

In the first half of 2013 housing values all across the US were rapidly increasing. Some of the hardest hit markets like Phoenix and Sacramento saw especially large jumps in housing values. The rate of increase in values has slowed somewhat this summer but the folks over at CoreLogic recently predicted that housing values will continue to increase. David Stiff, chief economist for CoreLogic Case-Shiller, recently said “Record levels of affordability, a slowly improving job market, and very small inventories of new and existing homes for sale will continue to drive U.S. home price appreciation…”.

Slowly and steadily rising housing values make buying a home an attractive option. And with mortgage rates still extremely low by historical standards now is a very good time to be purchasing or refinancing a home. There are lots of indications that rates will be rising significantly over the next year so contact us today to get more information of the available government-backed refinance and home purchase programs.