Archive for Refinancing

Mortgage lenders and homeowners received more positive mortgage refinancing news today as home refinance rates fell across the board. Interest rates on 30-year fixed-rate mortgages dropped in the latest week, real estate website Zillow.com said Tuesday.  Uncertainty over the economic recovery has spurred demand for safe-haven U.S. government debt, pulling yields and mortgage interest rates lower. Those lower home loan rates should lift mortgage refinancing activity and put more cash into consumers’ hands to funnel into the economy. They also make homes more affordable as the housing market copes with the absence of government support.  According to Zillow Mortgage Marketplace, mortgage rates on 30-year fixed rate home loans reported 4.28% Tuesday afternoon, down from 4.38% at the same time last week.

The 30-year fixed mortgage rate steadily declined for the majority of the week, hovering near 4.34%, with a steep fall to 4.29% on Monday, Zillow said.   Mortgage refinance rates on other types of home loans also fell.  15-year fixed mortgage rates were 3.85%, down from 3.87% the prior week. Rates for 5/1 ARM loans set at a fixed rate for five years and adjustable each following year, were 3.27%, down from 3.37%.  Rates for FHA refinance loans also dropped to 4.25% on averages for fixed 30-year terms.  Rates on 30-Year home equity loans fell another .15% so many borrowers looked to refinance their adjustable rate HELOC into a fixed rate loan.

Jul
12

Refinancing Costs for FHA Loans

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Today when you refinance mortgage loans above 80% loan to value it requires the borrower to pay additional mortgage insurance.  Whether the borrower is refinancing conventional or FHA loans, mortgage insurance will be required.  Monthly mortgage insurance has risen over the last few years due to the increase in loan defaults.  FHA Loan Pros recommends making sure you have included PMI into the loan payments when comparing mortgage refinance offers from conventional and FHA lenders. In addition, homeowners that refinance FHA must pay an additional 2.25% of the FHA loan amount up-front to cover the mortgage insurance premium. FHA is trying to get Congress to pass a bill to increase for the annual mortgage insurance premium rate.  It is important that borrowers consider all of the costs when considering the benefits of home refinancing.

Home mortgage refinancing can be an excellent opportunity to get a lower interest rate and more financial security for your home during these turbulent times.  Getting the best mortgage refinance rates is imperative to maximize monthly savings.  That is why homeowners should shop for a refinance loan and negotiate the closing costs. Market insiders have been reporting higher loan fees from mortgage lenders today.  Since the housing crisis we have seen fewer mortgage lenders and brokers.  Loan companies may be in a better position to offer you a no cost refinance option, but your credit must be stellar.

According to Steve Brown, CEO of Pacific Coast Bankers’ Bank, in San Francisco, mortgage lenders are trying to make up for loan default losses by raising revenues in closing costs on new refinances transactions.  The era of no income verification loans is long gone amid tightened regulations.

According to Yahoo Finance, the top 5 mortgage lenders today are Bank of America, Wells Fargo, JPMorgan Chase, U.S. Bancorp and Citigroup, “These banks represent the vast majority of all loans in the U.S.,” Brown said. But these banks sell home loans with largely the same set of borrowing requirements, as nearly all mortgage today are backed by the Federal Housing Administration, Fannie Mae and Freddie Mac.  But borrowers should still shop for the best mortgage refinance rates and look for the lending deals. Most mortgage bankers say a borrower should plan for a 30 to 60 day process when home refinancing.  With dropping property values and stricter appraisal guidelines, getting an appraisal can be an obstacle for mortgage refinancing.  “They might have to have the home appraised a couple of times to get a solid valuation.”

A spokesman for the Mortgage Lead Vault, a marketing company recommended “making sure that you are comparing apples to apples.  Verify the interest rate, term and of course the closing costs when comparing lender quotes.”  According to Zillow the survey indicated that borrowers spend about 5 hours shopping for a home loan online, yet they spend 10 hours shopping for a car.  31% of borrowers spent less than 2 hours researching their refinance loan. About 50% of all borrowers “only got one or two mortgage quotes.”  Many loan professionals suggest getting four refinance quotes.

The mortgage refinance application volume dropped significantly last week.  It appears the pool of eligible borrowers for home refinancing has been shrinking significantly as mortgage lenders continue to tighten their loan guidelines leaving no solutions for  borrowers with bad credit .   According to a report from CNBC, many insiders were surprised by MBA’s report this morning on weekly home refinancing applications report from the Mortgage Bankers Association.

Even as the 30-year fixed mortgage rates are available at 4.75%, refinancing fell dramatically last week for the first time in a month, down 14.25%.   Michael Fratantoni  writes, “Despite the historically low mortgage rates, many homeowners have already refinanced recently, remain underwater on their mortgages, have uncertain job situations, or have damaged credit following this downturn, and therefore may not qualify to refinance.”  Fratantoni underscores the problem most borrowers have with the lack of home equity being the driving force for not qualifying to refinance.  For homeowners who have good credit but owe more on their mortgage than their home is worth, they may be eligible to refinance under the government’s Home Affordable Refinance Program.  This refinance loan allows conforming mortgages to be refinanced  up to 125% loan to value.

The issue of bad credit refinancing is a biggest reason most borrowers can’t approved for a home refinance loan.  If you were late on a mortgage payment, you won’t qualify for the FHA refinance program.  That is why so many homeowners are seeking loan modification plans.   Many homeowners also suffer from credit card debt that usually brings down the credit scores.  The lack of refinancing while interest rates are at record lows underlines the major problems in mortgage lending in 2010.  It also suggests that the government involvement in the housing crisis may have its repercussions.

It 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 home-buyers 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.

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