Archive for the ‘Refinancing’ Category

Does Refinancing Make Sense?

Friday, February 27th, 2009

In the current market, if you can refinance, you probably should be. Refinancing is the process of obtaining a new loan that pays off your existing home loan. There are several reasons for wanting to do this, but the most important is to get a lower interest rate so you save money on your home loan. FHA loans can help you to refinance, as can other conventional lenders. The key here is to know when it makes sense to refinancing.

What’s Your Rate?

The first step in knowing if it makes sense to refinance is to know what your interest rate currently is. According to Bankrate.com, current 30-year mortgages are available at about 5 percent, which is a very low number. Those who wish to obtain a 15-year loan may even be able to pick up a home loan that is under five percent. If your current mortgage is at an interest rate that is higher than this, you could save money by refinancing.

Here is an example. Let us say you currently have a mortgage loan payment of $1400 per month and you owe $175,000 on your home and have another 28 years to pay on it. You are currently paying about 9 percent for the mortgage. If you keep this loan for the next 28 years, you will end up paying a total of $304,984 in interest alone, on top of the purchase price of the home.

Now, let us say you refinancing your home loan to a loan for 30 more years and pay 5.5 percent on the loan. Your mortgage payment is now under $1000 a month. At the end of your payments, you will have paid just $182,707 in interest payments towards the loan. As you can see, this is much more affordable than holding onto the loan you currently own.

You will likely need to pay closing costs and your homes appraised value still needs to be high enough to cover the mortgaged amount to qualify for a refinance. There are other qualifications you may need to make, too.

To find out if this is an option for you, get a quote from a lender. You may even qualify for an FHA loan through the refinance process. This can further lower your interest rate and make it even more affordable to buy your home.

Hope for Homeowners Program: Refinancing Opportunity for Borrowers

Wednesday, October 8th, 2008

With all the latest legislation passing through Congress specifically aimed at the housing market, it’s getting not only harder to get loans but more difficult to understand it all.  Luckily, the HOPE for Homeowners Program looks to be one with a basic breakdown.  The program has authorization under the National Housing Act, which was amended earlier in the year by the Housing and Economic Recovery Act of 2008.

What Does It Say?

HUD issued Mortgagee Letter 2008-29 detailing what this program includes.  First, it gives any current or delinquent borrowers the ability to refinance into a 30 year fixed rate loan through FHA. In order to qualify for this aspect, you must have made at least six payments on the mortgage prior to requesting the refinance.

Additionally, the program is designed for those who have a debt to income ratio higher than 31 percent with their current home loan.  The original loan must originate prior to January 1st, 2008.

  • Payment to income is limited to 31 percent while debt to income is limited to 43 percent.
  • These numbers may be higher, according to the program, following a three-month trial modification put in place through the program first.
  • There is a maximum loan of $550,440 on all loans through the HOPE for Homeowners program, (referenced as the H4H program.)
  • There is also a restriction of a 90 percent loan to value in place on these loans.
  • All homes must be owner occupied homes, on one unique properties
  • FHA approved appraisers must appraise the properties within three months prior to the closing
  • Origination fees are capped at 1 percent
  • Buyers do not pay closing costs and prepaid items upfront
  • A 3 percent upfront mortgage insurance premium and annual premium up to 1.5 percent will be applicable.

One of the unique aspects of the HOPE for Homeowners program is that lenders must insure that appraisals are complete within the letter of the law.  In other words, they are responsible for any poor or fraudulent appraisals that lead to an FHA insured mortgage.  Inflated home values, considered one of the problems within the housing market crash today.

More Information

The HOPE for Homeowners program promises to offer outstanding opportunities for homeowners to get out of the hole they are in.  Namely, they are able to get into FHA loans with a fixed rate, often lowering the amount they must pay monthly.

The program is available to those who have government loans and conventional prime loans, as well as Alt-A loans and the worrisome subprime loans. This includes most types of mortgages, too, including negative amortization, payment option and interest only mortgages.  There are legal restrictions, for example, any state or federal fraud conviction within the last ten years can disqualify an individual from obtaining the loans.

For homeowners struggling with their current loans, falling within these areas, there is no doubt that the HOPE for Homeowners Program offers a lifeline.  It is highly encouraged that you seek out FHA lenders to get the process started.

Can I Refinance my FHA Loan?

Friday, December 28th, 2007

With all this talk in the news and media about foreclosures lately and different programs to help those facing foreclosure, I began wondering about refinancing. So many times people refinance their loans and I thought someone is probably asking themselves this very question – can they refinance their FHA home loan? While they are thinking about this question to themselves and not asking a person, they begin to become anxious about their housing situation. Not knowing the answer to questions can lead one to a path of wrong decisions and stagnant path, not taking action which can be detrimental. Read the below information slowly and carefully because this could be the answer you are looking for.

An FHA streamline refinance is a mortgage refinance of an existing FHA loan with limited amount of documentation and qualifications which streamlines the process. I have to admit when I think back to the loan processing for purchasing a house or car, it takes up some time. Sitting there going through pages and pages of information, terms, and more making sure nothing is left out. I applaud the fact they have streamlined this process. These times made me feel as if I was enlisting in the military again. Now that you are aware of what a FHA streamline refinance is, let me share regarding the cost. This is always going to be important. There are many types of interest rate and fee combinations for FHA streamline refinance. Check with your lender for what the parameters are.

You know that I could not let you guys think that is all there was to this loan. Of course not, there are qualifications. You should not even be surprised because you have to qualify for most things today. Seems there are only two qualification requirements which are (1) must currently have a FHA loan; and (2) must be current on mortgage payments. I ask you if you were not current, why would you be applying for an additional loan? It does amaze me sometimes watching the news hearing what people are saying.

For those that were preparing to ask this question, is there a difference between a normal refinance and an FHA streamline refinance, the answer is a strong yes. The difference from what I surmised is qualifications and documents required to qualify for the loan. The benefit to me is streamlining. If this limits the amount of documents and qualifications, this could be the one for you. A big one before I forget is that with a typical refinance loan the loan cost will be higher than an FHA streamline. Oh another huge benefit to this is FHA does not require an appraisal for a FHA streamline. How many of you know the costs of an appraisal can sometimes get you? For that reason alone, you should be doing your homework and researching what you think is best.

The main concern I have is that you go to a loan officer and have not fully done your research on the type of loan you are seeking and then get turned down. You can never have too much knowledge. Take the time to research all types of loans and decide on what works best for you.

Taffy Wagner