About Government Refinance and Home Purchase Programs

After dipping to astonishing lows over the summer mortgage interest rates have begun inching up again in the last couple of weeks. Is it all uphill from here for interest rates? Well considering that rates have been at all time lows the most likely answer is yes.

The good news is that interest rates on government-backed mortgages are still very near the all time lows that were reached this summer. So if you have been considering refinancing or even if you just would like to get an estimate on a refinance or information on any other government-backed mortgage program contact us in the sidebar right away before rates head back up.

While interest rates on 30-year mortgages have basically leveled out or have inched upward in recent weeks, rates on 15-year mortgages have been inching down to new historic lows. For borrowers who can afford the marginally higher payments, 15-year mortgages can be a very effective way to dramatically reduce the total money paid in interest over the life of the loan. Contact us in the sidebar today to learn more about the benefits and payments associated with a 15-year mortgage.

Here is an excerpt from a recent Reuters article on the subject:

U.S. 30-year mortgage rates rose for a second straight week while those on 15-year mortgages dropped to a record low, according to a survey released on Thursday by Freddie Mac, the second-largest U.S. mortgage finance company. …

Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.37 percent for the week ended Sept. 16, up from the previous week’s 4.35 percent and down from its year-ago level of 5.04 percent, according to the survey.

Freddie Mac (FMCC.OB) started the 30-year fixed-rate mortgage survey in 1971.

Meanwhile, 15-year fixed-rate mortgages averaged 3.82 percent, down from 3.83 percent last week, the lowest since Freddie Mac began surveying this loan type in 1991.

“Interest rates on 30-year fixed mortgages have remained below 5 percent for the last 19 weeks giving people ample opportunity to refinance their existing mortgage debt,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

The weeks long downward trend in mortgage interest rates seems to have halted for now. Latest numbers have mortgage interest rates higher this week than last week. Rates on government-backed and conventional mortgages are still at record lows but won’t remain that low forever. If you have considered looking into refinancing to a lower rate contact us now in the sidebar before rates head back up again.

We will likely never see mortgage interest rates this low again. If you have considered looking into a refinance contact us in the sidebar now. It never hurts to get an estimate. See this from a recent LA Times blog post:

The interest rate for a 30-year mortgage fell for the eighth time in nine weeks, according to a widely watched survey, with the record lows triggering the highest volume of home refinancing in 15 months.

Freddie Mac’s weekly report on lenders said solid borrowers with 20% down payments or home equity were being offered 30-year fixed-rate loans at an average of 4.42% this week, down from 4.44% a week earlier. The borrowers would have paid 0.6% of the loan amount in upfront lender fees.

The average 30-year interest rate recorded by the survey has not risen in nine weeks, although it remained flat at 4.57% for the weeks ending July 8 and July 15.

The rate this week on 15-year fixed loans also edged down to an average of 3.90% compared with 3.92% the previous week, with 0.6% in lender fees.

For the last few years borrowers who had enough equity in their home to refinance their first mortgage but who were underwater when they combined their first and second mortgage had the option of refinancing the first mortgage only into an FHA loan as long as the second mortgage agreed to stay in second lien position. These so-called “subordination deals” were fairly complicated and never became very popular but they were at least an option. But recently the FHA announced it will no longer allow such subordination deals.

We get this from the recent FHA mortgagee letter on the topic:

This Mortgagee Letter eliminates the unlimited Combined Loan-to-Value (CLTV) ratio that was first introduced in Mortgagee Letter 2007-11.

The old policy is being replaced with the questionable new FHA short refinance program.

UPDATE (2012): On most FHA streamlines (FHA to FHA refinances) the FHA does allow subordinations now as long as the combined loan to value (CLTV) is lower than the value the FHA placed on the home at the time the current FHA loan was completed. COntact us in the sidebar to learn more.

If you have considered a refinance for your home now is the time to contact us in the sidebar. The government-backed mortgage programs remain some of the best options available for most people. We get this from a recent AP report:

Mortgage rates dropped to the lowest level in decades for the sixth time in seven weeks, offering the most attractive opportunity for those who qualify to refinance or purchase a home.

Government-controlled mortgage buyer Freddie Mac said Thursday that the average rate for 30-year fixed loans this week was 4.49 percent, down from 4.54 percent last week. That’s the lowest since Freddie Mac began tracking rates in 1971.

The average rate on the 15-year fixed loan dropped to 3.95 percent, down from 4 percent last week and the lowest on record.

Rates have fallen since spring as investors seek the safety of U.S. Treasury bonds. That has lowered the yield on Treasurys. Mortgage rates tend to track those yields.

The last time home loan rates were lower was during the 1950s, when most mortgages lasted just 20 or 25 years.

There is another change coming to the FHA mortgage insurance guidelines on October 4, 2010. Starting on that date the upfront mortgage insurance premium (MIP) for FHA loans is scheduled to be reduced from 2.25% to 1.00%. That should reduce closing costs on FHA loans significantly going forward. However the monthly mortgage insurance fees will be increasing from 0.55% annually to at least 0.90% which will increase monthly payments for new FHA loans. Here is a bit from a recent HousingWire article on the subject:

“While premium increases are never ideal, this bill was necessary to help improve the strength and stability of FHA’s single family programs,” said MBA chairman Robert Story Jr. “We are encouraged that FHA Commissioner [David] Stevens has indicated he may not need to raise premiums to the maximum, and we believe that that a small increase in the annual premium, coupled with a decrease in FHA’s upfront premium [calculated in the chart below, from the FHA], will help stabilize FHA while lowering closing costs for many borrowers.”

We get this report from the folks over at HousingWire:

The 30-year fixed-mortgage rate (FRM) dropped week-to-week nationally averaging 4.28%, according to Zillow Mortgage Marketplace’s weekly update. This is down 0.1% and a new record low according to their data. Last week’s averages remained steady.

Regionally 30-year rates are varying, but the majority of states saw a drop. California’s current rate is 4.33%, down from 4.34% last week, as is Colorado’s at 4.26%, down from 4.28%. Rates substantially decreased in New York to 4.23% (from 4.46%), Massachusetts to 4.28% (from 4.61%), Florida to 4.18% (from 4.33%) and Washington to 4.36% (from 4.56%) from last week.. Texas is down to 4.27% from 4.36% and Illinois state average is down to 4.33% from 4.31%.

Zillow reported the rate for 15-year fixed home loans at a national average 3.85%, while the rate for a 5-1 adjustable-rate mortgage (ARM) is at 3.27%.

These record low interest rates are a temporary thing. Contact us in the sidebar today if you would like to look into a refinance yourself.

In some cases when a borrower can’t get a loan modification they can apply for a deed-for-lease program instead. In such programs, rather than face a traditional foreclosure the borrower turns home over to the bank and in return is allowed to remain in the home as a renter. Here are some details on the program from the Fannie Mae site:

What is Deed-for-Lease?

The Deed-For-Lease™ option is a program from Fannie Mae that allows you to lease your home after you have transferred the title to your property to the mortgage company (commonly called a Deed-in-Lieu of Foreclosure). The lease terms are up to 12 months (with the possibility to extend longer). And the monthly rent is based on the current rental rates for your area—not on your original mortgage payment.

Deed-for-Lease is an alternative to foreclosure and may be an option if:

* You are ineligible to refinance or modify your mortgage
* You are facing a long-term hardship
* You are several months behind on your mortgage payments
* You may owe more on your home than it’s worth
* You have not been able to sell your home
* You want to remain in your home and neighborhood

…

Important! If your loan is not owned by Fannie Mae, there may be a similar leasing option offered by your mortgage company. Always contact them to see what is available.

There was an interesting article over at Forbes recently titled “All-Time Low Mortgage Rates: Time To Refinance?”. Here are some highlights:

Your breakeven period is one of the most important considerations in a refinance. To determine your breakeven period, you need to look at the monthly savings you’ll create by refinancing and the total cost to refinance your loan. Let’s say that by refinancing, you’ll save $200 a month, and that the cost to refinance is $4,800. To determine your breakeven period, divide your refinance cost by your monthly savings. In this example, the breakeven period would be 24 months, or two years.

If you plan to stay in your house for longer than the breakeven period, refinancing might make sense. Now, if you’re only planning to stay there for 26 months, will that $400 you save be worth the time and hassle of going through the refinancing process? Maybe not. But if you’re planning to stay in the house for another 10 years, the refinance would save you $2,400 a year for eight years, or $19,200 (less the cost of the refinance).

Contact us in the sidebar in order to find out if you can qualify for a refinance. If you can qualify for a refinance we can help you get the estimates/information you need to figure out your breakeven point.

There have been some speculations that interest rates on government-backed mortgages could creep even lower this coming week. A writer over at BankRate.com said the following:

For the fourth week in a row, we are going to set a record for the lowest rate in the nearly 25-year history of Bankrate’s weekly mortgage survey.

Last week the 30-year fixed averaged 4.75 percent in Bankrate’s survey. When the survey is conducted today, I expect it to fall to around 4.66 percent.

Contact us in the sidebar right away if you would like to refinance to a lower interest rate while such rates are still available.

The new financial reform law includes a provision that is specifically designed to provide relief to homeowners who have lost their jobs. We get this from a recent MarketWatch piece on the subject:

More help is on the way for unemployed homeowners struggling to make their mortgage payments, thanks to funding tucked into the financial reform legislation signed by President Obama on Wednesday.

Although the U.S. Department of Housing and Urban Development hasn’t released the details of exactly how the $1 billion emergency homeowners’ relief fund will be distributed, legislation dictates that the program start by Oct. 1.

HUD is reviewing the language to determine the best method of implementation, said Lemar C. Wooley, a HUD spokesman.

The bill also includes $1 billion for redevelopment of abandoned and foreclosed homes.”

Fill in the contact form on the right to learn more.