Have You Seen Your Refi and Mortgage Options Lately?

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:  

• 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. 

Source: Houselogic.com

Loan Flipping Scam Can Cost You Your Bethesda Home

Do you have equity in your Bethesda home but also have bills to pay? Are you thinking about refinancing to get cash for a needed item or service? Anyone who answers yes to either or both of these questions is a potential target for the latest mortgage scam: loan flipping.

How do you know the real lender from the scam artist? According to HouseLogic.com, these scammers prey on your financial anxiety and count on your not knowing their game. They’ll start with a phone call, posing as a legitimate lender, and ask if you want to refinance your mortgage and get cash back. But where a legitimate lender would stop there, the scammers keep up the smooth talk. They’ll entice you to take another loan (or two, or three) for that long-awaited vacation or the boat you thought you could never afford. They make you confuse your needs with your wants.

If you get caught up in all the great “stuff” you’ll get, the con artists figure you won’t realize how much you’ll actually have to pay back or won’t notice the outrageous fees they’re charging you—about 3 to 6 percent more than a legitimate lender. 

Once you’ve squeezed every last penny out of the refinance, the scammers will skip town with all that money you paid them in fees and prepayment penalties. You’ll be left with repayments you can’t afford that may ultimately cost you your home.

Being aware of the scam is only half of the equation. You also need to know how to protect yourself from a loan flipper.

·         Deal only with lenders you know well or who have been recommended to you by someone you trust. Don’t sign with someone who tries to smooth-talk you into an equity loan.

·         Question every fee in a refinance, and ask about anything you don’t understand. If you keep getting vague answers, find the door.

·         Don’t close until and unless you’re completely comfortable and clear on the details.

·         Check that the lender belongs to a group that promotes ethical practices, such as the Mortgage Bankers Association or the National Association of Mortgage Brokers.

Remember that a refinance isn’t supposed to leave you broke. It’s meant to tap the equity in your home for those legitimate things you need like a new roof or college tuition. Work with a legitimate lender and make sure that repaying the new loan is within your current means.  Anything else is a scam.

Contact 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 sub-divisions of Rosemary Hills, Rock Creek Forest, East Bethesda & Whitehall Condominium.

Home Refinancing Options After a Divorce

If you think that refinancing is the only way to remove an ex-spouse’s name from a mortgage, it’s not. According to a recent New York Times article, there is another, little-known but viable option which costs only about three to six percent of the outstanding loan principle.

It’s called Release of Liability, where the former spouse signs a quit-claim deed that gives up his or her claim to the home. So whether you’re in Rosemary Hills or any other neighborhood, read on for more information.

And although signing the quit-claim deed takes the former spouse’s name off the title, it doesn’t remove it from the mortgage. To execute an actual Release of Liability, lenders will charge from $300 to $1,000 and may impose an additional nonrefundable application fee of $250 to $500--substantial amounts, but still less than the costs involved in a complete refinancing.

Having a name removed from the mortgage can benefit both parties in the divorce. If your former spouse was behind on debts, a lien might be placed on the home. Likewise, if you were behind on the mortgage, it could hurt your ex-spouse’s credit.

Be aware that not all lenders offer this option and those that do will check your credit to ensure that you meet minimum credit scores and that you are current on the monthly mortgage payments. They may also require that other investors agree to this deal. If you can prove you can handle the monthly payments on your own, the lender may be agreeable. However, if you currently owe more on the home than it’s worth, this is not an alternative for you.

If you’re a qualified borrower and your current lender won’t perform the Release of Liability, you might change their mind by stating that you’ll just work through another lender.  It may take several inquiries, but chances are you’ll find someone who will execute this for you. Divorce is hard enough, so it’s worth knowing all the options to help make some transitions as easy as possible.

Contact 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 sub-divisions of Rosemary Hills, Rock Creek Forest, East Bethesda & Whitehall Condominium.

A Different Way to Lower Mortgage Payments

Whether you live in Bethesda, San Francisco or New York, refinancing for a lower mortgage payment is always appealing. But the fees and credit requirements can be burdensome.

According to a recent New York Times article, there is another, lesser-known option called “recasting” or “re-amortization” that can work just as well.  Basically, you lower your principal with a lump sum of cash and then reset your monthly payments based on the original interest rate and loan terms. Because your principal has been reduced, your monthly payments decrease and you save on your total interest for the loan. The larger the lump sum you can provide, the more you save. Just making extra payments without recasting only shortens the length of the loan.  It doesn’t reduce your monthly cost.

However, there are some stipulations. Finding a lender that even offers this service can be challenging, and those that do can have restrictions. Many lenders exclude FHA and Veterans Affairs loans. Lenders who do offer this service often require a minimum payment toward the principal and charge a fee. At JPMorgan Chase, the required minimum is $5,000 with a $150 fee. In addition, interest-only and adjustable-rate loans generally aren’t eligible, and a borrower must be current with all mortgage payments.

Lenders aren’t obligated to recast mortgages, and most don’t advertise it.  But in an effort to be more customer-service-focused, they will consider requests on a case-by-case basis.

This scenario typically works well for those who might not qualify for refinancing due to bad credit or self-employment.  It’s also good for anyone with extra cash like a year-end bonus, a tax refund, or proceeds from the sale of another property. It doesn’t make sense for anyone with interest rates of 5 percent or lower, since the extra cash would yield more being invested in something with a higher return.

Whether you choose refinancing or recasting, make sure it’s the right decision for your current situation. Don’t rob Peter to pay Paul just to get a lower interest rate.

Contact me today for expert help buying or selling in the DC, MD, & VA area!

Keep an Eye on 2011 Mortgage Rates

You could possibly pay more to buy or refinance a home in 2011, says a recent New York Times article. Rates for thirty-year, fixed-rate mortgages, the most common type of home loan, have risen steadily since their lowest point in mid-November, 2010.

According to Freddie Mac, rates on December 16 were at around 4.80 percent, up from 4.17 percent in early November, but still significantly lower than the 5.21 percent of April 2010.

Some experts think the current increase could be caused in part by rising interest rates on government Treasury and other bonds, which mortgage rates tend to follow. Treasury rates are rising on fears of inflation, the rising budget deficit, and nervousness over the effects of unemployment on the economy.

However, some are downplaying this increase as temporary. One Freddie Mac economist believes that 30-year fixed rate loans will stay below 5 percent in 2011, and still others think the rates will drop again in the next 60 days.

Compared with the 6 to 8 percent interest rates over the past decade, the current rates still make it affordable to refinance or buy—and there was great demand for refinancing in 2010, with more to come in 2011. What may make it harder are tighter requirements from lenders and the still-depressed real estate market.

Your best bet is to stay aware of the rate changes, but don’t over-analyze. It’s tough to hit a bull’s-eye on a constantly moving target, so try not to worry if the rate drops after you’ve locked in. It could very well have risen instead. Make the jump when it works best for your budget and then enjoy your home.

Contact me today for expert help buying or selling in the DC, MD, & VA area!