About Government Refinance and Home Purchase Programs

The federal government officially shut down on October 1st after congressional leaders failed to come to a budget agreement. One question on the minds of many Americans is how will this shut down affect government-backed mortgages like FHA, VA, and USDA-RD loans.

The short answer to that question is: It depends on how long the shut down lasts. If government officials can sort things out in a week or so borrowers probably won’t even notice a difference. The longer the shut down lasts, the more it could delay mortgage closings. With the government shut down, agencies like the FHA and VA will be using only skeleton crews. The longer that happens the more loans will start backing up as those skeleton crews get overwhelmed with requests. Likewise, requests to the IRS for tax transcripts that are normally needed for any type of loan could start to be delayed.

So the upshot is, the sooner the federal government can get their acts together and come to some kind of compromise, the better it will be for you as you seek a government backed refinance or home purchase loan.

In the meantime, rates have dipped again over the last few weeks so now is a terrific time to get started on a refinance or a home purchase. If you get started now you can close your new loan after this shut down is over. Fill in the contact form on the right to get more information and to be pointed in the right direction to get started.

The financial world was certain that the Federal Reserve would announce that it will begin tapering the $85 billion per month it is pouring in to the US economy. But the Fed had other plans. The announcement just came out that the Fed will not taper yet. That means we will see a dip in mortgage interest rates for the next little while.

Here is a comment from the Fed’s press release today:

Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen further and fiscal policy is restraining economic growth. … the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month.

It remains likely that the Fed will decide to begin the tapering process later this year, but for now rates should improve. That means now is the time to get a refinance or home purchase started. Contact us in the sidebar immediately to learn more and to get the ball rolling on a government refinance or home purchase loan.

The federal government is enacting several new mortgage rules starting in January of 2014. Many of the new regulations will not be discernible to borrowers, like changes to the good faith estimate form. But some changes will make a noticeable difference to consumers.

First, the government is considering lowering the loan size limits on mortgages backed by Fannie Mae and Freddie Mac as well as FHA loans. No final decision has been made on that front yet.

Second, the debt to income ratios (DTI) for most loans are scheduled to be reduced and fixed starting this coming January. Currently there is some leeway in DTI ratios and folks with solid assets and credit scores can be approved with debt to income ratios of more that 50%. The new rules set the maximum DTI at 43%. While this will help ensure borrowers don’t get in over their heads, it also means that borrowers will be not qualify for as much money as they currently can.

Third, interest rates are likely to rise. Rates are currently still at very low levels by historical standards but most pundits are expecting them to continue to rise for the next year or two.

The good news is that this Autumn is a marvelous time to purchase a home or refinance. Housing values are still low but moving higher so anyone who purchases a home this fall is likely to get a low rate and likely see the value of their new home rise over time. Likewise, with rates still very low refinancing is an excellent idea for millions of American homeowners.

Contact us today to learn more about available programs and to get started on the process.

A new jobs report came out this morning and it revealed that the economy added fewer jobs in August than expected. While that is not good news overall it may prove to be useful to mortgage interest rates over the next several months.

The Federal Reserve has been pouring 85 billion dollars per month into the US economy in an effort to spur economic growth. As the economy has shown signs of improvement this year there has been a growing consensus that the Fed will taper that money flow as early as this month. Mortgage interest rates have risen since May in anticipation of the Fed taking its foot off the gas.

Today’s jobs news in conjunction with other signs that the economy is still struggling could mean the Fed will wait longer before it pulls back on its quantitative easing program. Some experts are now predicting the Fed will now wait until December before it starts tapering the QE2 program.

If that is the case it means we will have a window this fall where rates will stop increasing. That means now is the time to start the process of seeking a refinance or a home purchase loan. Most mortgages take several weeks to fund from start to finish so starting the process in early September normally would mean a closing in mid October.

Fill in the contact form in the sidebar right away to get more information on the available government mortgage programs. This fall may be an excellent time to benefit from the record low rates we have seen in recent years due to the Fed’s interest rate compression efforts.

Home values have been rising steadily in most U.S. markets for the last 1-2 years. While rising home prices are obviously good for folks looking to refinance or sell their homes, steadily increasing home values are also good for home buyers. While higher home prices may seem like a bad thing for buyers in the short run, the upward trend in housing values helps home buyers tremendously in the long run. If a buyer pays $200,000 for a home in 2013 and home values increase at a rate of 5% per year over the next 10 years, that home will be worth more than $300,000 in 2023. Even if home prices increase more slowly than that the fact is that steady increases in housing values means the home will be worth more in the future than it is worth now. That is one of the major benefits of owning a home rather than renting.

Owning a home is not for everyone, but home ownership does make a lot of sense for a lot of Americans. If you are currently renting, now is a good time to look into buying. And if you already own a home and would like to move, now might be a good time to look into selling and perhaps buying again. Housing values are rising but they are not overheated like they were 7-9 years ago. And mortgage interest rates are still very low by any historical measure. Contact us in the form in the sidebar to learn more about the available purchase programs such as the FHA, VA, USDA, or Fannie/Freddie 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.

When the housing bubble burst in 2007 the reputation of adjustable rate mortgages (ARMs) took a beating. The problem then was too many borrowers who were intending to sell their homes in 5-10 years before their rate began adjusting suddenly found themselves underwater and unable to sell. ARMs were vilified as the problem. But that was not really fair. The reality is that when housing prices are stable people normally don’t keep a mortgage all that long. The current average is 4-7 years in a mortgage before a refinance or before the home is sold. With that in mind an ARM can be a good option for many borrowers.

Paying a premium for a 30 year fixed

A 30 year fixed mortgage is a tremendous product and is the mainstay of the mortgage lending industry for good reason. It is stable and it keeps payments reasonably low. However, people in 30 year fixed mortgages are paying a premium to have their rate fixed for that long. For families that plan to sell a home in less than 10 years, paying for 30 years of a fixed rate is probably leaving money on the table. Rates on 5, 7, or 10 year ARM’s tend to be more than a full percentage point lower than rates on 30 year fixed mortgages. Over the course of 5-10 years that can mean a lot of money in interest payments. For instance on a $200,000 mortgage the interest payments on a 30 year fixed mortgage could be about $1700 more per year than the interest payments on an ARM prior to the rate adjusting period.

The right type of loan for the situation

For families who are confident they will stay put in a home for more than 10 years a 30 or 15 year fixed mortgage is the way to go. However for families that tend to be on the move and don’t fully expect to own their home that long, a 5-10 year ARM is often a a less expensive option. This is true both for refinances and for home purchases.

Contact us in the sidebar today to learn more about both the government-backed ARM and fixed rate options for refinances and home purchases.