About Government Refinance and Home Purchase Programs

There was good news this week from the new director of the Federal Housing Finance Agency (FHFA), Mel Watt. Fannie Mae and Freddie Mac were schedule raise their fees at the start of 2014 and those fee hikes would have resulted directly in higher interest rates. Mr. Watt announced this week that he was putting a hold on those scheduled fee increases for at least six months to give him and his department more time to analyze the consequences of such a hike.

Here is what Watt said on the matter:

“Upon being sworn in as Director of the Federal Housing Finance Agency, I intend to announce that the FHFA will delay implementation of the g-fee and risk-based pricing plan announced in the FHFA’s news release dated December 9, 2013 (and detailed more fully in the Loan-Level Price Adjustment Matrix released earlier this week) until such time as I have had the opportunity to evaluate fully the rationale for the plan and the plan’s likely impact on the GSE’s risk exposure, the cost and availability of credit and how the plan would interface with the qualified mortgage standards.”

Anything that prevents rate hikes is good news to borrowers. Contact us today to get more information on available programs.

Recent reports have shown that the values of homes in nearly all U.S. markets continue to increase. In some hard hit markets values are up more than 50% over the lows they hit in recent years. In most every market housing values have been steadily increasing.

Increasing housing prices open several options for homeowners and perspective homeowners:

Refinancing to remove mortgage insurance (PMI) — A large percentage of American homeowners purchased their homes with less than a 20% downpayment. That means those homeowners are paying a monthly mortgage insurance fee. For instance, FHA loans include mortgage insurance. When a home increases in value it opens the possibility of refinancing to a new loan with no mortgage insurance. Contact us to get an estimate on the current value of your home to see if removing your monthly PMI is possible.

Cash out refinances — As values of homes increase, the possibility of getting cash out refinances returns. For families who owe quite a bit less than their home is worth, a cash out refinance can be a terrific way tap into the equity of a home. And with rates still historically low, cash out refinances make sense for a lot of families.

Home purchases — As we have discussed in the past, increasing home prices are generally a good thing for families considering buying a home. When home prices are increasing, the home you buy this year should be worth more in the years to come.

Contact us in the form in the sidebar today to learn more about the options available to you. Now is an excellent time to start while mortgage interest rates are still hovering near historic lows.

Over the last few years there has been a lot of buzz about principal reduction programs for underwater homeowners. The FHA even came out with some guidelines related to a principal reduction program in 2010. The problem was, none of the principal reduction programs announced were mandatory. That means the banks were left to voluntarily forgive debts. As you can imagine, banks were not anxious to give money away.

However, principal reductions can and do make sense in some cases for banks. For example, foreclosing on a home is a long and expensive process for a bank and in some cases a bank determines that it would be financially better off reducing the principal owed on a home and keeping the current borrower in the house than going through a long foreclosure process and then selling the bank-owned home at a steep discount. Losing $30,000 with a principal reduction is better than losing $60,000 after a long foreclosure and home sale process. Other reasons to reduce principal exist as well.

Each potential principal reduction case is unique and should be looked at individually. If you are researching a principal reduction, contact us in the form on the right to have one of our counselors look at your situation and point you in the right direction.

As housing values all across the country increase, the opportunities to get cash out refinances are increasing too. For homeowners with substantial equity in their homes there are numerous reasons to be interested in a cash out refinance: Home improvements, increasing cash reserves, paying down more expensive debts, etc. The benefit of a cash out refinance is it allows borrowers to tap into the equity of what is likely their biggest asset, their home, at an interest rate that is normally lower than they could get in any other way.

There are several government-backed programs that allow for cash out refinances. With Fannie Mae and Freddie Mac you can normally get up to 80% cash out without adding mortgage insurance. FHA allows up to 85% cash out. And military veterans can get up to 100% cash out through the VA mortgage program.

Contact us in the sidebar today to learn more about your options with government-backed cash out refinance programs.