Archive for Conventional Refinancing
Mortgage Refinancing Advice for 2010
Posted by: | CommentsWith the Obama administration and the Federal Reserve making a concerted effort to keep interest rates low, you can’t go wrong with home mortgage refinancing. In an effort to mitigate the foreclosure crisis and stimulate the housing sector, our government has been buying mortgage backed securities so that borrowers have the opportunity to refinance or purchase housing across the country. Since the mortgage crisis of 2006 a lot has happened in the mortgage industry. Thousands of mortgage companies have gone out of business and series of bank consolidation has transformed a new era for home mortgages. For the most part, lenders have tightened mortgage refinancing guidelines. There are however a few bright spots with government lending programs under FHA and VA refinancing.
Government Refinancing: FHA rolled out FHA Secure, Hope for Homeowners and rumors continue to swirl that HUD will introduce a FHA refinance loan that includes a principal reduction for specific regions that have seen a significant loss of home equity and a higher foreclosure rate. FHA refinance programs have tightened cash out guidelines to 85% while VA refinance with cash back remains at 90%. Borrowers can still refinance with the FHA streamline to 96.5% and the VA streamline still allows borrowers 100% refinancing with no appraisal required.
Income Documentation Requirements: Mortgage refinance rates range from 4.5 to 4.875% on the thirty year mortgage and the fifteen year mortgage has rates reported as low as 4.375%. Conventional refinance guidelines no longer allow stated income or no income refinance loans. No documentation mortgage refinancing has become very difficult to find in 2010.
Mortgage Insurance Replacing Second Mortgages: Conforming lenders no longer allow borrowers to refinance with a second mortgage to avoid PMI. In most cases anything above 80% CLTV requires borrowers to pay for private mortgage insurance. Many believe that FHA will be increasing their mortgage insurance as well to compensate for the dwindling reserves and increased loan defaults.
Credit Score Factors: Credit score requirements have become tougher for people with less than perfect credit. Bad credit refinance programs are not available with conventional loan products, but FHA and VA continue to make exceptions for borrowers who have compensating factors. However, even HUD and the VA mortgage lenders are beginning to raise the credit score minimums for the government refinance programs. The bottom line is that now is a wonderful time to for home refinancing if your credit is good and you can document your income. Most lending experts believe that this tightening trend will continue for mortgage refinancing for the near future.
The Mortgage Refinancing Buzz offer refinance advice at no cost. Take advantage of our network of trusted lenders that specialize in home refinancing so you can save more money next time you shop for a loan online.
Rates Drop and Mortgage Refinancing Applications Soar Again
Posted by: | CommentsIt seems that Europe’s financial crisis is converting to low mortgage rates for US borrowers looking to refinance their first or second mortgage. Homeowners seeking a low rate mortgage refinancing are in the right place at the right time if they have the credit, income and equity in their home to qualify: Mortgage rates are inching closer to a record low. The window of opportunity may close soon. Refinance rates could jump if investors grow more confident and shift money out of the safety of government bonds, which influence mortgage interest rates. For now, though, mortgage refinance rates are ridiculously low. The average thirty-year fixed-rate loan sank to 4.78% last week, the lowest this year and barely above the record of 4.71% set in December. And fifteen-year loans are at their lowest rates in twenty years.
According to the Mortgage Bankers Association, mortgage refinance applications soared last week to the highest level in seven months. Anxiety over the European crisis has caused global investors to snap up Treasury bonds, which they view as much safer than other investments. Treasury yields have fallen as a result, taking mortgage refinance rates down, too. When the crisis eases, and especially if the American economy recovery stays on track, expect investors to move out of bonds and back into stocks. That would make refinance mortgages more expensive. “If the economy finally really shows sustained improvement, rates are definitely going to go up,” said Fred Chamberlin, a consultant with Alpine Mortgage Planning in Eugene, Ore. He suggests that homeowners looking to refinance move fast and not hold out for even lower rates. “If you want the bottom, the only way you’re going to know it is when you’ve missed it,” Chamberlin said.
Home refinancing isn’t right for everyone who qualifies. In most cases, mortgage refinance loans cost several thousand dollars in fees. No cost mortgage refinancing may be available but usually the interest rates are higher, so in the end you may not save as much money as you would have you paid the lending closing costs. Experienced mortgage lenders recommend calculating how long it will take to recover those fees with the lower loan rate. As cheap as mortgages are these days, the number of loans being taken out to buy homes remains at its lowest point in more than 13 years. One reason is that a special tax credit for homebuyers expired last month. Many people had rushed to sign contracts by then. Another problem millions of homeowners are having is qualifying for a refinance mortgage. Borrowers need solid credit and a down payment of at least 3.5%.
Banks tightened mortgage refinance guidelines after millions of borrowers fell into default and foreclosure during the housing bust. A loan officer with Icon Mortgage in Las Vegas said, “They’re really looking with a magnifying glass,” said Steve Mevorah,. “They’re trying to make sure that they are flawless loans.” Analysts had expected mortgage rates to rise when the government ended a program designed to bolster the housing market. Instead, they fell because of fears that Greece would default on its debt.
Comparing Conventional Refinance Loans to FHA Refinancing
Posted by: | CommentsOne of the most common questions we get at Mortgage Refinancing Buzz is “What is the difference between conventional home refinancing and FHA refinance loans?” Both types of mortgage refinance loans are useful loan product and each program offers unique refinancing benefits for specific situations. Let’s compare the both loans and see if we can find out which refinance mortgage best suits your needs. Both conventional and FHA loan requirements have changed significantly in 2010, so discuss your eligibility with an experienced loan officer before making refinancing decisions online.
A conventional refinance loan is a traditional mortgage used to refinance an existing mortgage that stays within the conforming loan limits of $417,000. In most cases, this loan product ensures the lowest possible mortgage refinance rates. Conventional refinancing guidelines allow borrowers to take cash out up to 80% and usually the cash out will cost the borrower .25 of a point in closing costs. So on a $100,000 mortgage, a borrower would pay the lender $250 for the cash out feature. At the time this article is being published, conventional refinance loans are being reported at 4.625% fixed on thirty-year mortgage paying 1% point in origination fees. There is no cost for private mortgage insurance for loans that do not exceed 80% loan to value.
FHA refinance loans are similar to the conventional mortgages, but there are a few differences. First of all, FHA home loans require mortgage insurance. The only time is doesn’t is when a borrower takes out a 15-year FHA loan below 90% with no cash out. Cash out refinancing with FHA is allowed up to 85%. This is 5% more than the conventional loan offers, so if a borrower needs more cash out, then the FHA refinance is the loan of choice. If a borrower has some credit issues in the past, then FHA refinancing is likely the best choice because FHA guidelines are typically more forgiving when it comes to credit issues. Another advantage FHA refinance loan has is that the loans are assumable. That means if you sell the house, the buyer could theoretically assume your loan. When mortgage rates start to go up, the assumable feature good be a significant benefit, because the new borrower would get the fixed rate that original borrower locked into. Another feature borrowers like with FHA loans is that there is no pre-payment penalty. Whereas with some conventional loans the borrowers have pre-pay penalties. The most popular feature of FHA refinancing has to be the streamline option. When a borrower has a FHA mortgage and they seek refinancing with no cash back, the FHA streamline allows the borrower to get a low rate refinance with reduced closing costs. FHA streamline refinancing allows FHA customers to refinance anytime the market rate drops into a position that would save them money. During uncertain times the FHA refinance offers protection that if the rates drop, the FHA borrower can reap the benefits.
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