Posts Tagged ‘do I qualify for a refinance’

Interest Rates lower from Brexit

July 12, 2016


Interest rates have moved lower since the Brexit vote at the end of June sent stocks crashing, the Pound Sterling down to lows versus the Dollar it hasn’t seen in decades, and all of the politician who led the Brexit campaign quit. But how much have interest rates actually moved since the Brexit vote?

I’ve kept up with interest rates daily since 2009. Since the Brexit vote toward the end of June, interest rates have only improved by 0.125-0.250%. Based on the number of “low interest rate” stories out there, you’d think interest rates would have dropped by at least a half point and have set new all time historic lows since the vote. Why all of the stories? I think it has to do with several factors:

  • yields on treasury bonds have experienced some major change, but treasury bonds don’t impact interest rates. As discussed countless times on this blog (do a search for “MBS” or “mortgage backed security” in the search box at the top right of the main page of this blog), interest rates are impacted by the movement of mortgage backed security bonds. Those prices haven’t changed near as much as the treasury yields.
  • the big move on interest rates was back in January of this year when interest rates dropped by over a half point from the start of the month until the end of the month. Interest rates have been about at this level for most of the year.
  • why the “low rate” stories now? Well, in January, stories were focusing more on the Spring market, home sales increasing, new construction startups increasing, etc. By the time we approach July, the Spring Market is over, there is a natural lull in home sales (everyone goes on vacation in July), and something is needed to fill the 24-hour news cycle. The Brexit vote along with rates improving some since that vote provided the needed stories.
  • since this is a normal “lull” period in the housing market, marketing efforts can now be turned to potential refinances.

Are interest rates low? Yes, absolutely.

Should one consider refinancing? Of course!

But don’t get swept away by it. You want to talk with an experienced mortgage loan officer who can give you the pros and cons of refinancing. For example, this morning I spoke with someone who wanted to refinance using a 15 year mortgage and pay discount points to get the rate into the 2’s. After running the numbers, his “break even” point on the monthly savings versus the closing costs for the new loan increased when he paid discount points to lower the rate! That wasn’t a typo… by paying discount points to get a lower rate, the amount of time needed to break even increased.

In the frenzy to secure a low rate, be sure to ask questions. Work with a mortgage loan officer who watches for trends and doesn’t hop onto the bandwagon of recent events. Someone who will discuss loan options with you instead of just quoting a rate and asking you if you are ready to get started. If the home you are looking to refinance is in the state of Georgia, contact me today. I can help you get going!

Besides… interest rates aren’t at their historic lows yet. That means there is still room for interest rates to improve.



Financing a cash purchase

October 20, 2015


We are currently in a seller’s market, and you are looking to buy a home. You want to be competitive, but you don’t want to tie up cash for 6+ months. After buying a home, the must be on title for at least 6 months in order to do a cash out refinance OR open home equity line of credit.

If there was only a way to pay for the home in cash now, and then get a loan to recoup the cash immediately. There is now!

Buyers who purchase a home within the past six months in cash are eligible to finance the property today. That way a more competitive cash offer can be presented to the seller, and the home buyer can still get financing after they close on the home.

To qualify for Delayed Financing:

  • The new loan amount can be no more than the actual documented amount of the borrower’s initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points.
  • The loan is subject to the maximum allowed loan to value ratios for the cash out refinance.
  • The purchase transaction was an arms-length transaction.
  • The transaction is documented by the HUD-1, which confirms that no mortgage financing was used to obtain the subject property. A recorded trustee’s deed (or similar alternative) confirming the amount paid by the grantee to trustee may be substituted for a HUD-1 if a HUD-1 was not provided to the purchaser at time of sale.
  • The sources of funds for the purchase transaction are documented (such as, bank statements, personal loan documents, HELOC on another property).
  • All other cash-out refinance eligibility requirements are met.

Wanting to make a cash offer on a home, but not tie up the cash for the next 6+ months? Buying that home in the state of Georgia? If you’ve answered yes to both, contact me today to get started. I can help guide you through the loan process to get you approved for a cash out refinance without the 6 months seasoning requirement.



Interest Rates at 2014 lows

October 16, 2014


This year, interest rates are going to rise“… I know we’ve all heard that over the past several years, but 2014 was to be the year rates finally went up. Well, interest rates have improved and were at their lowest point of the year (so far) on Wednesday. Why is this the case?

First, most analysts thought 2014 would be the end of low rates because the Federal Reserve was exiting the bond-buying business. Over the past several years, the Federal Reserve implemented a Quantitative Easing program known as QE. The third round (QE3) began tapering off at the end of 2013. The Federal Reserve currently plans to end the QE program later this month. This was going to make rates jump into the 5’s.

The end of QE3 was the expected reason rates would rise, but it is typically unforeseen events that impact interest rates. We’ve seen several unexpected events in 2014:

  • Global Economy – There were signs of the global economy slowing at the start of the year in emerging markets such as China, Brazil and India. As the year continued, the economic numbers got worse. China could be at the start of its own housing crisis.
  • Ukraine – The volatility created by the Russian involvement in Ukraine caused sanctions to be levied against Russia pushing its economy to the brink of a recession. These events have also caused a slowing of the economy overall in the Eurozone.
  • Middle East – Instability in the Middle East can cause nervousness in the markets. The rise of ISIS certainly qualifies as instability. When the markets get nervous, money usually flows out of stocks and into bonds. This helps mortgage rates.
  • Ebola – As the Ebola crisis intensifies, there are worries of it impacting the global economy.

When events like this happen, investors seek a safer investment than a troubled stock market. Stocks have lost major ground over the past few weeks. The US Dollar, which was panned mightily over the past few years, is now the safest haven in the market. More bonds are being purchased, and interest rates have improved.

Interest rates are now back into the high 3’s for a 30 year fixed rate loan. If you missed out on your refinance chance, it is back. If the property is in Georgia, I can refinance you into a new low rate. Contact me today to take advantage of this drop in rates before it is gone.


HARP 2.0 review

August 21, 2012

HARP 2.0 kicked into full gear during the spring. The revamped program has been around for roughly 5 months now. It is time to look back and see if it is working as it was originally advertised. Some of the changes included homeowners being able to refinance with any lender regardless of if they have PMI, a second mortgage, or if they are really, REALLY underwater on their mortgage.

Let’s look at each of those from my own client’s experiences and what has been commonly found true in the industry:

#1. Homeowners can refinance even if they are underwater on their mortgage and still not pay PMI if they do not currently pay PMI.

This is working out as planned. If a homeowner does not have PMI on their loan and qualify for HARP, then the refinance can take place and no PMI will be required for the new loan.

#2. Homeowners can refinance even if they DO have PMI on their current loan.

This is mostly true. Almost all of the PMI companies to allow for transfers of the current mortgage insurance policy to the new loan. Your loan officer will be able to determine who has your PMI and if they allow for PMI transfers.

#3. A homeowner can refinance even if they have a second mortgage.

This is probably mostly true as HARP 2 allows unlimited total loan to value. Since HARP 2 began, I have not had a subordination request denied by a second mortgage company. This isn’t to say NO ONE has had one denied. I’m sure someone, somewhere has still had a subordination request denied. From my experience, HARP 2 is working as advertised in this regard.

#4. A homeowner can refinance even if they are REALLY underwater on their mortgage.

Depending on what you read, this can be true or untrue. There have been reports of some homeowners still being denied, but there are now no limits on the loan to value. Homeowners that were previously denied for being too far underwater are able to refinance.

#5. A homeowner can refinance with any lender using HARP 2.0.

This one seems to be mostly no if the loan to values exceed 125%. If the loan to value is at or below 125%, then yes, in most cases many banks and mortgage brokers can do the refinance. However, when the loan to value moves over 125%, then fewer banks and brokers can actually do the refinance. For some reason, 125% seems to be the cutoff for the “any lender” aspect of HARP 2. If a homeowner falls into this category, then their current loan servicer is probably their only option.

For my own mortgage, I was in this same situation. My loan to value sits over the 125% level, and I was unable to do the HARP 2 refinance through the company I work for. I had to use my current loan servicer. The good news is, I was able to refinance my mortgage to a rate of 4.250%. The only downside was the interest rate. My rate was roughly 0.500% higher than the rate I could have got somewhere else. I didn’t have a choice as I needed the unlimited loan to value. A rate of 4.250% was better than not refinancing at all.

The moral of the story – HARP 2 has mostly accomplished what it set out to do. The only caveat being if one needs an unlimited loan to value refinance. Under that scenario, the options mostly seem to be limited to one’s current loan servicer.

How should a homeowner proceed? I would contact a loan officer with your preferred lender first. They should be able to review your situation and see what you might qualify for with HARP 2. If you do need an unlimited loan to value and your current loan servicer, then you can call and see what they can offer. The advantage of contacting your preferred lender first is you’ll know your options and the going interest rates that are available. That could help when negotiating with your servicer if they are you only option.

Whether it is your primary residence, a second home, or an investment property… if the home is located in the state of Georgia, I can help. Contact me today, and we can evaluate what you qualify for with HARP 2.

Making Homes Affordable Program Expanded

June 7, 2011

This is a scary similar title to a previous post about the Making Homes Affordable refinance loan program. As previously posted, this refinance program has been extended through the end of June 2012. Now it has been expanded to incorporate existing loans and situations that it previously would not allow. These changes include:

  • Borrowers can be removed from existing loan: prior to the expansion, if two borrowers were on the existing loan, then both needed to be on the new loan. This posed a problem if changes occurred with the borrowers. For example, loss of income from one borrower, credit problems for a borrower, a divorce situation, etc. Now a borrower can be removed from the loan so long as the other borrower can prove they have been making the mortgage payment over the last 12 months from their own funds (and no late payments over the last 12 months).
  • A new borrower can be added to the existing loan: as long as the original borrower (or one of the original borrowers) is still on the new loan, and the new borrower qualifies, that person can be added to the new loan. That said, a non-occupant co-borrower is still not allowed.
  • Private Mortgage Insurance can be transferred: This is huge because, previously, loans that had PMI were dead in the water with this deal. Now PMI companies are more open to transfer their existing policies to the new loan. As it has been the entire time, regardless of the new value of the home, if PMI was not on the old loan, it will NOT be on the new one.

The basics of the loan program are the same. Existing loans looking to use this program must have been closed prior to March 1, 2009. Fannie Mae must own the mortgage. There can be no late payments in the last 12 months on the mortgage, and the home can not have been listed for sale on the market in the past six months.

In short, most of the aspects of the program have not changed, but the few parts that have open up new avenues for home owners that previously could not take advantage of this program. If you’ve been told “you don’t qualify” for this program because of PMI or the need to drop/add a borrower, reach out to me. If the property is in Georgia, I’d enjoy the opportunity to walk you through this mortgage process and help you refinance your home!

Questions to ask when refinancing

May 23, 2011

In a recent post, we looked at the extension of the Making Homes Affordable loan program into June 2012. I mentioned the first step in the process is asking questions to see if a refinance is potentially a wise financial decision. The first thing I do when someone asks me whether or not a refinance makes sense is ask them these four questions:

  • What was the original loan amount?
  • What is the interest rate?
  • What is the type of loan?
  • When was the closing date?

With this information I can put together some rough refinance figures based on their current monthly payment, estimated closing costs, and estimated remaining principal balance.

These numbers won’t be exact, but the beauty of using these questions is my client will know in less than 5 minutes if it might be worth investing more time in trying to refinance their mortgage. If it looks like the numbers make sense, then we can proceed to completing a loan application, pulling credit, etc.

The fifth and final question is the most important one of all. Before I take a loan application, ask about income, equity in the property, or pull credit to start someone’s loan file, I always ask “how long do you plan to remain in the home?”

Again, this is the most important question to ask. Why? If the break even point (number of months it takes to make up the closing costs for the new loan) on refinancing the current mortgage is 3 years away, but you plan to sell within a year, why would you need to refinance your mortgage? It doesn’t make any sense to do it!

That is how I approach every potential client who is looking to refinance. I find out the current payment, potential new payment, how long it takes to break even, and how long one plans to stay in the home. No gimmicky sales pitches, just the facts and nothing else.

Thinking about whether or not a refinance might be right for you? If you want the facts, and only the facts, you know who to contact!

Making Homes Affordable Program Extended

May 17, 2011

The Making Homes Affordable Loan Program has been extended for another year. The new expiration date for this program is June 30, 2012. Meaning, in order to qualify for this loan, the refinance must be completed by that date.

You could be thinking… “Great! What exactly is the Making Homes Affordable loan program?” Fantastic question! I’m glad you asked.

Making Homes Affordable (also know as DU Refi Plus for Fannie Mae loans OR Freddie Relief for Freddie Mac) is a loan program designed to help homeowners, whose property values may have declined, take advantage of the current historically low interest rates. Qualified homeowners can refinance their mortgage up to 125% of its current appraisal value.

The best part? If you are not paying mortgage insurance on your current loan, there will NOT be mortgage insurance on your new loan!

In order to qualify for the loan, homeowners must:

  • have closed on the current loan prior to June 1, 2009
  • verify the mortgage is held by Fannie Mae or Freddie Mac
  • be current on the mortgage payment
  • not be paying private mortgage insurance on the current mortgage*
  • subordinate or pay off any other liens (home equity line or fixed second mortgage) on the property**

* – if the loan currently requires mortgage insurance, there is a possibility of transferring it to the new loan

** – in order to subordinate other liens, the guidelines of the lien holder must be met. If unable to subordinate a second mortgage on the property, the homeowner would need to payoff the second mortgage in order to qualify for the Making Homes Affordable program

Remember that this loan program pertains to the first mortgage only. While closing costs can be rolled into the new loan amount, no other debts can be put into the new mortgage. This means the program does not allow cash out refinances or consolidating multiple mortgages.

Making Home Affordable loan program is a great tool for homeowners to use to refinance their current mortgage. Several of my clients have used it over the past couple of years and saved money by lowering their mortgage payment!

If you’d like to save money on your mortgage payment and get started with the loan process:

  • The first thing to do is decide if it makes sense to refinance your mortgage. I have five quick and easy questions to ask you that would determine if a refinance is the right financial decision to make.
  • Next, let’s figure out if Fannie Mae or Freddie Mac hold your loan. That is something we can research together OR you can easily look it up yourself at Fannie and Freddie’s websites. For Fannie Mae, use this link. For Freddie Mac, try this one.
  • Then, we need to start the loan process by getting you prequalified for a mortgage. This part of the process will be very similar to the process you went through when you initially purchased the home.
  • Finally we put it all together. If the monthly savings indicate it might make sense to refinance AND Fannie Mae or Freddie Mac own your mortgage AND you qualify for a new loan, then it would be time to order an appraisal and get the ball rolling!

How do you get started with part 1 of this process? That is easy, contact me! If the home is in the state of Georgia, I would be able to help you with the refinance. You don’t have to use your current loan servicer, and can refinance with whomever you choose. What are you waiting for?!?

Should I refinance?

August 31, 2010

As you can probably imagine, I’ve heard this question a lot lately. It is a great question – when should one consider refinancing their mortgage?

The first step is to know your current interest rate. If the available rate is a half point lower than your current interest rate, it is worth a 5 minute call to your mortgage consultant. That is all it takes – 5 minutes and you’ll know!

In order to run a quick refinance scenario, I need the following details in order to provide an accurate evaluation of your mortgage options:

  • original loan amount
  • interest rate
  • type of loan
  • closing date

Once those answers are provided, I can run a quick scenario to let you know a new monthly payment, closing costs, and the break even point* on the new loan.

* – “break even point” is the closing costs needed to refinance divided by the monthly savings. That number shows how many months it would take to make back the money it costs to complete the refinance.

Now for the most important question of all – how long do you plan to remain in the home? Why is this question so important – well, if you know how long you plan to remain in the home AND then compare that time line to the break even point, it becomes clear pretty quickly whether or not it makes sense to refinance.

Remember, most people believe “should I refinance” is the most important question to answer. Knowing how long you plan to stay in the home is just as important.  Saving money is great, but not if it doesn’t make sense in the long run. To ensure it is the best situation for you, make sure to know “how much” you’ll save AND “how long” you’ll be saving it.

“Should I refinance”, yes that question has become about as common as “are we there yet” on road trips! If you’d like to know the answer to that question, you know how to find me.

Even though I’ve been asked that question a lot recently, I promise I have a much better disposition than Homer does handling repeated questions!