Low interest rates and new loan programs abound this summer, so if you assumed your refinancing and mortgage options were dismal, you’ll be surprised by these three offerings.
1. Refinance with new FHA fees
In a nutshell: FHA raised insurance premiums for new borrowers, while lowering fees for some existing customers who refinance, making comparison shopping with private mortgage insurance worthwhile. Mortgage insurance covers the lender against losses caused when borrowers stop making payments.
The details: FHA’s new insurance premium rates include a great deal for existing FHA borrowers — you can refinance by paying a miniscule .01% upfront fee and an annual premium of just .55%.
The catch: The deal is only for home owners who got their FHA mortgage on or before May 31, 2009.
The latest FHA deal for new FHA customers buying homes isn’t nearly as sweet. You’ll pay a whopping 1.75% upfront fee and an annual premium of 1.25% — more if your loan is more than $625,000. For a $200,000 loan, that’s $3,500 for the upfront premium payment and $2,500 for the annual premium.
To shop the FHA deal against private mortgage insurance, see how much you’d pay for your specific loan and location using calculators from such sources as MGIC, Radian, or Genworth Financial. Use the calculators to check how your payment would change if you have a smaller or larger down payment.
Private mortgage insurance is based on the size of your down payment (5% is typically the minimum).
2. Refinance underwater mortgage
In a nutshell: If you owe more than your home is worth, you may finally be able to refinance into a lower rate thanks to the government’s HARP refinancing program.
The details: You can take advantage of historically low interest rates by using the latest version of the Home Affordable Refinance Program, which removed a previous cap on how far below your mortgage your home value can be.
The HARP program even works if you’ve been hit by the economic double-whammy of a falling family income and a falling home price. You qualify for a HARP refinance if:
You have income coming in.
You’ve made your mortgage payments on time every month for the past six months and have no more than one late payment in the past year.
The catch: Banks can layer their own tougher rules on top of the HARP requirements, and they’re not obligated to let you use the program to refinance your existing loan.
3. Refinance rental properties
In a nutshell: Some real estate investors have new loan options for the first time in years.
The details: In recent years, small landlords like me have had a tough time finding a bank to finance more rental property purchases. Once you had more than four rental property loans, Fannie Mae and Freddie Mac were no longer willing to guarantee your loans, even when your credit scores were top-notch and the property was able to turn a profit from day one of ownership.
Now, some banks participating in the HARP program are taking applications from landlords with multiple properties and lots of mortgages.
It’s too soon to say whether the banks will actually fund landlords who want to refinance.
The catches:
1. Refinance with new FHA fees
In a nutshell: FHA raised insurance premiums for new borrowers, while lowering fees for some existing customers who refinance, making comparison shopping with private mortgage insurance worthwhile. Mortgage insurance covers the lender against losses caused when borrowers stop making payments.
The details: FHA’s new insurance premium rates include a great deal for existing FHA borrowers — you can refinance by paying a miniscule .01% upfront fee and an annual premium of just .55%.
The catch: The deal is only for home owners who got their FHA mortgage on or before May 31, 2009.
The latest FHA deal for new FHA customers buying homes isn’t nearly as sweet. You’ll pay a whopping 1.75% upfront fee and an annual premium of 1.25% — more if your loan is more than $625,000. For a $200,000 loan, that’s $3,500 for the upfront premium payment and $2,500 for the annual premium.
To shop the FHA deal against private mortgage insurance, see how much you’d pay for your specific loan and location using calculators from such sources as MGIC, Radian, or Genworth Financial. Use the calculators to check how your payment would change if you have a smaller or larger down payment.
Private mortgage insurance is based on the size of your down payment (5% is typically the minimum).
2. Refinance underwater mortgage
In a nutshell: If you owe more than your home is worth, you may finally be able to refinance into a lower rate thanks to the government’s HARP refinancing program.
The details: You can take advantage of historically low interest rates by using the latest version of the Home Affordable Refinance Program, which removed a previous cap on how far below your mortgage your home value can be.
The HARP program even works if you’ve been hit by the economic double-whammy of a falling family income and a falling home price. You qualify for a HARP refinance if:
You have income coming in.
You’ve made your mortgage payments on time every month for the past six months and have no more than one late payment in the past year.
The catch: Banks can layer their own tougher rules on top of the HARP requirements, and they’re not obligated to let you use the program to refinance your existing loan.
3. Refinance rental properties
In a nutshell: Some real estate investors have new loan options for the first time in years.
The details: In recent years, small landlords like me have had a tough time finding a bank to finance more rental property purchases. Once you had more than four rental property loans, Fannie Mae and Freddie Mac were no longer willing to guarantee your loans, even when your credit scores were top-notch and the property was able to turn a profit from day one of ownership.
Now, some banks participating in the HARP program are taking applications from landlords with multiple properties and lots of mortgages.
It’s too soon to say whether the banks will actually fund landlords who want to refinance.
The catches:
- Only Fannie Mae has made this change. (It’ll purchase up to 10 loans from any one investor.) Freddie Mac is still limiting single-family landlords to four loans.
- Most banks discount your rental income by 25% when making investor loans, which adds up when you have multiple properties.
But, the fact that banks are accepting applications from rental property owners is a sign the credit spigot may be reopening for creditworthy real estate investors.
Are you shopping for a refinance or a mortgage to purchase a home? What has your experience been like?
If you need professional advice in this matter, do not hesitate to
contact me and I will happily put you in touch with one of my preferred
lenders.
Would you like to work with a Realtor who keeps you in the loop with the latest on home ownership and real estate matters? Call me, Mynor Herrera, today
for expert help buying or selling in the DC, MD, & VA areas! I also
specialize in Bethesda and Chevy Chase, as well as the subdivisions of
Rosemary Hills, Rock Creek Forest, East Bethesda and Whitehall
Condominium.
Loan modification programs have been created to help the borrower keep their home during tough financial times.
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