About Government Refinance and Home Purchase Programs

In January of 2017 the FHA announced that it would be reducing its ongoing mortgage insurance fees for 85 basis points per year to 60 basis points per year. While not an earth-shattering change, it would have been a nice reduction in the pmi rates for new FHA borrowers. The change was scheduled to go take effect on January 28. Upon entering office, the Trump administration put a hold on all pending changes. As a result, the reduction of FHA pmi is currently, and possibly permanently on hold. Time will tell how the new administration will deal with government-backed mortgage programs over the next four years. So far, no major changes — just this one minor change in plans.

For many years the maximum loan amount for a conforming (Fannie/Freddie) mortgage has been set at $417,000 except in counties designated at “high-cost” counties. Starting in January of 2017 that limit has finally been increased to at least $424,100 in every county in America. The limits are higher than that in high-cost counties still too. Likewise, the maximum loan amount for FHA loans in non high-cost counties has been increase nationwide from $271,050 to $275,665. The loan limit changes aren’t earth-shattering, but they will be helpful to borrowers who are getting loans right near the limits. See here for the loan limits in every county in America.

Contact us today to learn more about available government-backed home purchase and refinance programs.

As we reported last spring, the USDA Rural Housing program will be significantly improving its terms starting in October of 2016. Here is an excerpt of the announcement from the USDA:

Upfront Guarantee Fee and Annual Fee Reduction for Fiscal Year (FY) 2017

This message provides advance notice of the upfront guarantee fee and annual fee structure that will be effective for Single Family Housing Guaranteed Loan Program (SFHGLP) loans in fiscal year (FY) 2017, which begins October 1, 2016 and ends at the close of business on September 30, 2017. The upfront guarantee fee will change from 2.75% to 1.0% of the loan amount. The annual fee will change from 0.50% to 0.35% of the average scheduled unpaid principal balance for the life of the loan.

Please refer to the unnumbered letter (UL), “Upfront Guarantee Fee and Annual Fee for Fiscal Year 2017,” for additional details.

In short, the fee to get started on a USDA loan will be cut by more than 60% and the only ongoing monthly USDA fees will be cut but 30%. All of that makes the USDA Rural Housing program even more useful. The USDA Rural Housing program is great for folks willing to buy a home away from urban areas and who don’t make more than about $80-90k per year as a household. The rates are low on USDA loans and USDA home purchase loans require $0 down. For a map of eligible areas see here.

Contact us today for more info on the USDA Rural Housing mortgage program.

The world financial markets did not take last week’s British vote to leave the European Union well. Stock markets all over the world tumbled Friday and Monday as the shock waves of the so-called Brexit vote reverberated around the world. The immediate result was investors fleeing stocks and racing to the relative safety of bonds. That rush to buy bonds pushed the yield on the 10 year T-Note lower, and as usual, mortgage interest rates mirrored that move lower. Mortgage interest rates dropped between 1/8 and 1/4 percent between Thursday and Monday. Rates have remained lower so far this week but with a rebound in the US stock markets on Wednesday we’ll see where rates end up for the rest of the month.

The takeaway from this is that now is an excellent time to research a mortgage refinance or a home purchase. Rates are near historic lows and there are several government-backed mortgage programs available. Contact in the sidebar for guidance regarding refinances or on our home purchase page for assistance qualifying for a home purchase loan.

In the wake of the 2007 housing bubble bursting, adjustable rate mortgages (ARMs) got somewhat of a bad rap. The problem in the early 2000’s was too many borrowers were purchasing homes with ARMs without understanding how they work. The result was their ARMs began adjusting higher years down the road and unprepared borrowers found themselves unable to make their payments. But ARMs can be very useful loans when understood and utilized properly.

Paying a premium for 30 years mortgages

While 30 year mortgages are currently the most popular form of mortgage, they come at a cost. There is a premium, in the form of a higher interest rate, to be paid for the guarantee of keeping a rate fixed for 30 years. For homeowners who keep their mortgage a over the course of decades, that premium is well worth the security of a long term fixed rate. But the reality is that most people sell their home or refinance within 5 years of getting their mortgage. So most folks get a higher rate for the right to have a fixed rate for 30 years but then end up selling or refinancing a couple of years later anyway.

Who should get an ARM?

Folks who feel fairly confident they will sell their home in the next 5-10 years are excellent candidates for ARM mortgages. Rates on ARMs are significantly lower than rates on 30 year mortgages so refinancing to an ARM (or purchasing a home with an ARM) can lead to huge interest savings.

Contact us to get a quote on a government-backed ARM loan

If you think there is a good chance you’ll sell your home in the next 10 years contact us today to get an estimate on a refinance to an ARM. Rates on ARM lows are surprisingly low and a refi to an ARM could save you a ton of money over the next few years before you sell your home.

There was some question leading into yesterday’s Federal Reserve announcement whether the Fed would raise its short-term interest rate or not. The answer came back as a “no” for now. The Fed cited mixed economic reports in recent months in their decision to hold off on a rate hike. The Fed is looking for more clear signs that the U.S. economy is healthy and growing before hiking rates again, and there is no sure way to know when that will happen. Most pundits are forecasting that it will likely be September at soonest before a rate hike might be on the table again.

All of this means we can expect nice low mortgage interest rates for another couple of months at least. That means now is a great time to look into a refinance or a home purchase. With home values continuing to increase across the country, cash out refinances are becoming popular again. Increasing home values are also making homes more attractive as investments. Contact us today to get more info on available refinance and home purchase programs.

The jobs report that came out about a week ago came in with a much lower number of new jobs created than analysts were expecting. While unemployment numbers are staying relatively low, the number of new jobs created in the economy was troubling to the financial community. The immediate result of the report was a pullback in the stock markets and a dip in the yields for government bonds. That dip in bond yields, as usual, correlated with a small dip in mortgage interest rates. So mortgage interest rates are looking good right now.

If you are considering a refinance or a home purchase, now is an excellent time to get the process started. Contact us in the sidebar for for refinance information, or on our home purchase page for info on home purchase mortgage programs.

The USDA Rural Development home purchase program just announced plans to significantly reduce fees starting this fall. Here is what the USDA said in a recent email announcement:

Upfront Guarantee Fee and Annual Fee Reduction for Fiscal Year (FY) 2017

This message provides advance notice of the upfront guarantee fee and annual fee structure that will be effective for Single Family Housing Guaranteed Loan Program (SFHGLP) loans in fiscal year (FY) 2017, which begins October 1, 2016 and ends at the close of business on September 30, 2017. The upfront guarantee fee will change from 2.75% to 1.0% of the loan amount. The annual fee will change from 0.50% to 0.35% of the average scheduled unpaid principal balance for the life of the loan.

Please refer to the unnumbered letter (UL), “Upfront Guarantee Fee and Annual Fee for Fiscal Year 2017,” for additional details.

The USDA RD program helps home buyers purchase homes with no money down, provided the the home is located in a designated rural area. See our home purchase page for more details on the program. This reduction in fees will make the USDA RD program an even more attractive option for home buyers.

Janet Yellen, the Chair of the Federal Reserve, gave a speech on Tuesday that sent stocks higher and the yield on bonds lower. The gist of Ms. Yellen’s speech was that the economy is showing signs of weakness and thus the Fed would not be raising its interest rates any time soon. As usual, mortgage interest rates dipped in concert with the dip in the yield on the 10 year T-Note. With signs of a possible new recession mounting, the Fed won’t want to do anything to make economic conditions worse in the short run. That is a good sign for folks looking to refinance or to purchase a home. Contact us today to get more information on available mortgage programs while rates are still near historical lows.

Mortgage interest rates began falling in January and hit a low point in mid February. The dip in mortgage interest rate coincides with the recent dip in stock prices. As investors have fled stocks to the relative safety of U.S. Treasury bonds, the yield on those bonds have dropped and as usual, mortgage interest rates have dropped as well. While there has been a small recovery in bond yields over the last few weeks, mortgage interest rates remain extraordinarily low. If you have been considering refinancing a mortgage or purchasing a home, now is an excellent time to start. Contact us today to be pointed in the right direction.

The stock market has taken a severe beating so far in 2016. The major stock indexes have been tanking for weeks now. While this is bad news for investors, it has become good news for folks looking to refinance a mortgage or buy a home. Mortgage interest rates have improved significantly in the last few weeks.

As usual, when stock market values drop quickly, investors race to safer investments like U.S. Treasury bonds. As more bonds got bought up the yield on those bonds drops. And as we’ve noted in the past, movement in mortgage interest rates tend to mirror the yield on the 10-year T-note.

There’s no telling how long this dip in rates will last, so contact us today in the sidebar to get an estimate on a refinance. Now is a great time to look into lowering interest rates, getting cash out, or shortening the term of a mortgage. Or contact us on our home purchase page to look into getting pre-qualified to purchase a home.

2015 has been a bumpy ride for mortgage interest rates. After dipping to two-year lows in February, rates rose sharply in March, dipped again in April, rose even more sharply in June, moved lower slowly through October, and spiked again in November. Staying with that roller coaster pattern, rates have been slowly moving lower again since a mild spike in early November. The spikes and dips in interest rates have largely been triggered by good news or bad news in the global economy. When positive reports have come out, the markets assume the Fed is ready to raise its baseline lending rates and mortgage interest rates jump up. As bad news arrives about the economy, doubts about the Fed making a move creep in and mortgage interest rates begin to dip.

While markets are unpredictable, one certain thing is that mortgage interest rates are currently still very low by historical measures. If you have been considering a refinance to improve your interest rate or to remove mortgage insurance or to get cash out, contact us in the sidebar while rates are still low. Likewise, if you are looking at purchasing a home, contact us on our home purchase page. While rates have bounced around this year, the overall range of interest rates is still surprisingly low.