Refinance ToolBox

UFMIP Set to Increase for FHA Refinance and Purchase Mortgage Loans

2010-02-03T10:42:00.000-05:00

A couple weeks ago, I touched on the Upfront Mortgage Insurance Premium (UFMIP) for FHA mortgage home loans. As a short recap, the UFMIP is a HUD “fee”, and is a percentage charge of total loan amount to a refinancing or home purchase borrower. The premium is paid upfront and is a part of closing costs. This “fee” goes to HUD and not the lender. HUD charges this premium in order to remain solvent and continue the FHA insured loan program.

Currently, the UFMIP for an FHA loan is equal to 1.75 percent of the borrower’s total loan amount. So, if your total loan amount, including closing costs is $200,000, the UFMIP will be $3,500.

Beginning in April of this year, the UFMIP percentage is moving up to 2.25% and will include FHA streamlines as well.

Long story short, if you are looking to do an FHA loan, getting your application in before the April deadline would be a good idea while mortgage rates are still low and the UFMIP is still at 1.75 percent. Under the new percentage, the UFMIP on a $200,000 loan amount is $4,500. That’s a $1,000 difference in closing costs between the 1.75 percent and 2.25 percent premium percentages. Nothing to sneeze at for sure.

Refinance mortgage rates have continued in steady fashion over the past week. There has been no major news to influence rates and the treasury yields have held in a nice tight range.

If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

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Housing Numbers Fall Along with Refinance Mortgage Rates

2010-01-27T11:32:00.000-05:00

We had a few good months in the housing market with both previously occupied and new home sales. The mood on the street was lifting, while signs of a housing market stabilization were shining bright. Then the December numbers were reported.

Sales of previously occupied homes took the largest monthly drop in more than 40 years in December, marking a figure more dramatic than most had expected. December home sales were down nearly 17 percent and many are attributing this deep slide to the home purchase tax credit extension. Sales had been expected to fall by 10 percent, but December's sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million, from an unchanged pace of 6.54 million in November, the National Association of Realtors said Monday.

2009 home sales closed out the year at 5.16 million, an increase of about 5 percent from the year earlier and the fist annual sales gain since 2005. This may sound good, but home prices fell by 12.4 percent, the largest decline since the Great Depression.

Regarding new home sales, it was reported today that sales fell 7.6 percent to a 342,000 unit annual rate from an upwardly revised 370,000 units in November. It was the second straight month that new home sales declined. For 2009, new home sales fell 22.9 percent to a record low 374,000 units.

There is great debate on the street as to whether home sales and prices will drop further form here. One camp cites the fact that inventories have fallen and that the tax rebate incentive has been continued through June. The other camp is stating that there is a huge inventory of foreclosures yet to hit the market while the jobs picture has not improved.

Most would agree that we have already experienced the worst of the housing downturn, but where we go from here will depend on a number of factors yet to be determined. Factors such as employment, loan modification programs, mortgage rates, and lenders opening their wallets a little wider.

So home value and lender programs are a key concern still, not only for those purchasing homes, but for those refinancing.

On the refinance mortgage rates front, we have experienced a drop once again. The lousy housing numbers are prompting investors to get a bit jittery and many are moving toward a flight to safety in US Treasury bonds. This is causing the treasury yield on the 10-Year bond to drop and mortgage rates have dropped along with it.

There is much concern that mortgage rates could rise significantly once the government’s mortgage-backed securities and Treasury buy-back programs come to an end, which is right around the corner.

We’ll have to wait and see if the government comes in to save the day once again in an effort to keep mortgage rates near the current all-time lows.

If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

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FHA Refinance and the Upfront Mortgage Insurance Premium (UFMIP)

2010-01-20T10:34:00.000-05:00

The FHA refinance home loan program offers many benefits to homeowners that are refinancing a majority of the equity in their home, and also for those with low credit scores. You get qualified mortgage refinance rates at that near a person refinancing with a loan-to-value ratio (LTV) under 80 percent with an excellent credit score.

One of the major reasons that the HUD is able to insure the FHA refinance loans is through the Upfront Mortgage Insurance Premium (UFMIP). There is much confusion among home loan borrowers about the UFMIP, so I thought I’d try to explain it here.

The FHA UFMIP is an upfront charge for a refinance loan that is charged to maintain the FHA program. Currently, the UFMIP is equal to 1.75% of the borrower’s total loan amount. So, if you are refinancing $200,000 with all closing costs included, the UFMIP will be amount to $3,500 (200,000 times .0175). So, the total loan amount would be $203,500 because the UFMIP is added upfront to the total loan amount.

Is the UFMIP a closing cost?

Yes. It will likely be posted to the good faith estimate as a settlement charge, so yes, it is a closing cost.

Does the lender get this money as a profit?

No. The UFMIP goes to the HUD department.

Does the UFMIP count toward the qualifying LTV?

No. This is very important for those with high LTV scenarios. The UFMIP is not added to the total loan amount for LTV purposes, which is currently allowed at 97% LTV for a rate/term refinance and 85% for a cash-out refinance.

Should I include the UFMIP in my Breakeven Analysis?

Yes. Since it is really a closing cost, it should be included in your refinance breakeven analysis. For example, suppose you are refinancing $200,000, of which $2,500 are for closing costs and the required UFMIP is $3,500. Your total bottom-line monthly savings will be $225 with the refinance. So, your total real closing costs are $6,000 ($2,500 closing costs plus $3500 UFMIP).

The breakeven point in this example is 27 months. ($6,000 total costs divided by the $225 per month savings).

Now the good thing about knowing this information is that you can easily compare between a conventional loan quote and an FHA refinance quote. Get a quote and good faith estimate for the same qualifying interest rate for both conventional and FHA, and do your breakeven analysis. The numbers will tell the story.

I hope this helps!

If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

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Refinance Mortgage Applications to Rise as ARMs Reset Higher

2010-01-13T11:16:00.000-05:00

As if we need another kick in the stomach during this trouble economic period, thousands of US homeowners are experiencing fresh payment shock on their home mortgages as adjustable rate mortgages reset higher. Unfortunately, this is leaving countless homeowners in a struggle to make ends meet at the end of each month.

Expect a rise in the number of refinance mortgage applications as the full wave of the current ARM resets hit across the country.

All of this is in face of declining home values throughout America, leaving many homeowners in an “underwater” mortgage scenario. This is where the value of the borrower’s home has decreased to a level that is below the principle balance of the mortgage on the house.

The actual number of ARMs due to reset this year is unclear, but analysts estimate that as many as 1.3 million borrowers took out $389 billion in option ARMs in 2004 and 2005 alone. Many of these home loans will be due to adjust this year.

Another worry is that the Fed will increase interest rates in the coming months in order to fend off inflation. These are the rates often tied to ARM indexes and could result in more payments being adjusted upward sooner.

Add the soon ending home buyer tax credit and this could pack another wallop to an already ailing housing market.

For those that can’t refinance out of their adjustable rate mortgage, they would be advised to try and work something out with their lender. The Obama administration has been increasing pressure on banks to help borrowers, but it's still up to the banks to decide if they will. We have heard this story too many times in the past couple of years, so don’t expect much help with government “subsidized” mortgage loan modifications.

Home foreclosures have steadied somewhat recently, could reach 4 million in the US in 2010 according to RealtyTrac. Let’s hope the numbers are wrong.

On the mortgage refinance rates front, the 10-Year treasury yield has backed off a bit over the past week, causing a slight dip to already attractive home loan interest rates.

If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

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Mortgage Refinance Rates Drop on Week

2010-01-06T10:25:00.000-05:00

On Tuesday, Treasury bond prices rose, pushing yields to their lowest level since Christmas amid a slight up-tick in activity. This, as we know, is good for refinance mortgage rates and rates have dropped this week.

The key for future significant interest rate movement to the upside is to watch the yield on the 10-year Treasury. Any break above the 4.0 percent level could mean bad things as far as mortgage rates go.

As for the economy and the jobs front, ADP projected that non-farm payrolls will post an 84,000 decline in December, a touch worse-than-expected. Even so, the trend is positive and, despite month-to-month variations, ADP has tracked the official NFP change fairly well. Whether payrolls turned positive in December or not, they are headed for positive territory.

Pending home sales for November did not fare so well. The number of people preparing to buy a home fell sharply in November, an unsettling new sign that the housing market may be headed for a "double-dip" downturn over the winter. The National Association of Realtors said its seasonally adjusted index of sales contracts fell 16 percent from October to November, ending nine months of gains. Economists surveyed by Thomson Reuters had expected only a 2 percent drop. No doubt, the governments $8,000 tax credit expiration, then extension to this spring has played a major role in November’s pending sales housing numbers.

So, as the trend has gone, we are getting conflicting economic reports on some of the major areas affecting mortgages and mortgage rates.

In addition, the Federal Reserve has been busy buying up $1.25 trillion in mortgage-backed securities to help keep interest rates at or near record lows. This program almost single handedly brought the mortgage spread premium (and the rates offered to mortgage borrowers) down by a full percentage point. That program is scheduled to run out at the end of March, though a sudden jump in rates could force the Fed to extend it.

Refinance mortgage rates are still near historic lows, so there is still time to take advantage of the low rates. Just make sure to get a solid refinance pre-qualification to include your income, credit, and approximate home value before you jump in to the process. Those that are currently qualified stand to reap a financially significant benefit with low mortgage rates that may not be available again in the future.

If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

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Treasury Yield Creeping Up Along with Refinance Mortgage Rates

2009-12-30T11:37:00.000-05:00

In the span of a few short weeks, the yield on the 10-Year treasury has bolted up by more than one-half of a percentage point. That is a major move in treasuries and confirms the current investor mood is getting a bit comfier at the year’s end.

Whether investor sentiment moving away from long term bonds in favor of riskier and higher yielding investments is smart here is not our call, we can only work with what is given. Of course we know that as the 10-Year treasury yield goes up, so does refinance mortgage rates. So, with the recent investor movement out of 10-Year bonds and into the equities market, mortgage rates have bounced up off historic lows by almost one-half percent, roughly the same amount as the rise in the 10-Year Treasury Yield.

Fortunately for those still considering a home refinance, mortgage rates are still in good shape with the current par or “even” rate on the 30-year fixed home loan standing near 5.25 percent.

The big test for further and significant increases to mortgage refinance rates will be the 4.0 percent level on the 10-year treasury. Back in June of this year, we almost breached the 4.0 percent level, but there was strong resistance at that mark. The 10-year ultimately fell back to levels near 3.2 percent in November.

Just as with stocks, major resistance levels, once breached, can lead to a major move upward. The10-year treasury 4.0 percent mark is the major resistance level to pay attention to as far as refinance mortgage rates are concerned. A solid close above this level could be a bad sign for mortgage rates, at least in the short-term.

I know that there are many people that held out when rates recently hit historic lows, but refinance rates are still in great shape for those considering a lock. Yes, they have bounced off their lows, but the risk that interest rates will rise significantly higher still outweighs the risk that they will fall like a rock at current levels.

In housing, the S&P composite index of home prices in 20 metropolitan areas was flat in October, falling short of expectations for a rise of 0.2 percent according to a Reuters survey. September's index was revised upward to a gain of 0.4 percent, from a previously reported 0.3 percent.

Some would leave you to believe that the housing market has now stabilized, but that assessment may be preliminary. A continued rise in home defaults along with a huge crop of foreclosures waiting to hit the listing market could produce another wave of falling home prices. Continued low mortgage rates along with improvement in consumer confidence and employment could help to curtail further home price drops. We’ll just have to wait and see where the ball bounces from here.

If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

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Current Steep Bond Market Yield Curve can affect Mortgage Refinance Rates

2009-12-23T10:47:00.000-05:00

Those that follow the Refinance Toolbox blog know that US bond yields play a major role in the mortgage refinance rates offered to the public by lenders. More specifically, it’s the yield on the US 10-Year Treasury, which is the benchmark for home mortgage interest rates. As the yield goes up, rates go up and vice-versa.

Mortgage rates have recently been holding at the lowest levels in history, thanks in large part to a consistent low treasury yield.

Over the past several days, the “Yield Curve” has been getting steeper. The yield curve is the difference between rates on short-term and long-term Treasuries, and is currently at its highest level ever. This tells us that investors are expecting a strong economic turnaround ahead, and are selling out of longer-term US treasuries, such as the 10-year treasury, in favor of higher return investment vehicles.

As the 10-year treasuries get sold, the bond price drops, and the yield goes up. Not a great thing for refinance mortgage rates.

Banks once again are the big winners here. They borrow from the Fed at short-term rates near zero, while higher long-term rates mean even bigger risk-free profits for the industry.

Consumers on the other hand, get slapped again. Most mortgages and many other types of loans are pegged to long-term rates, a steeper yield curve means a higher cost of borrowing for most consumers and businesses.

Refinance mortgage rates have lifted a bit off their lows, but are still in great shape. But, we’ll have to keep an eye on the 10-year treasury yield. It closed yesterday at 3.744%, still in good shape, but a whopping one-half percent higher than it was only 2 weeks ago.

Continued stronger-than expected economic reports and hints of future inflation could send the yield over 4.0% very quickly. Since the current mortgage spread premium is now in historic check, you could expect mortgage rates to rise with the treasuries step for step.

In continued good news for the housing market, home re-sales surged last month to the highest level in nearly three years. Much of the sales increase is due to buyers racing to complete their sales before the original expiration date of a tax credit for first-time buyers, originally scheduled to expire Nov. 30.

The housing market recovery, however, is still facing strong headwinds, as high unemployment figures continue with no clear end in sight. Mortgage defaults are still setting records and some experts warn that hundreds of thousands of foreclosed properties have yet to be put up for sale. Plenty of traditional sellers are also keeping their homes off the market, hoping for a better price.

So what does this mean for those looking to refinance their home? Well, mortgage refinance rates are still in great shape, but as you can see by the current steep yield curve, could be heading northward. It might not be such a bad idea to check on locking your interest rate now, as the risk of rates going up significantly far outweighs a drop in refinance rates at current levels.

Just make sure to receive a thorough pre-qualification from your refinancing lender before you pull the trigger. You want to have reasonable idea of your home’s value along with an analysis of your credit standing and income ratios for mortgage qualification purposes. If you qualify based on a solid pre-qualification, there is no reason not to lock at current refinance rates if it creates the financial benefit you are looking to achieve.

If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Many Self-Employed Missing Out on Low Refinance Mortgage Rates

2009-12-16T10:51:00.000-05:00

The subprime mortgage meltdown along with its banking crisis aftershock has hurt the chances of many self-employed individuals looking to take advantage of today’s historic low refinance mortgage rates. After banking balance sheets and liquidity took a severe downturn, mortgage lenders began to tighten up their underwriting guidelines for offer refinance programs.

No-Doc and Reduced-Doc loans were among the first casualties of the tightened lending standards. The option for a homeowner to refinance with anything but a fully-documented income loan is pretty much non-existent in today’s refinance lending environment.

Why you might ask? Well, mortgage lenders do not want to take on any risk after the meltdown. A Full-Doc loan gives them the most assurance of the ability of the refinancing homeowner to repay their loan.

Self-employed individuals have been impacted greatly by mortgage lender restrictions on loan program options. During the great housing boom earlier this decade, most self-employed people simply used a “Stated Income” loan to either refinance or purchase a home. This option was used because mortgage lenders use the bottom-line income for self-employed individuals, after tax write-offs for fully documented loans. Since most self-employed people will not qualify Full Doc after income tax write-offs, the stated income loan option was a very nice deal.

Now that stated income refinance loans have fallen by the wayside, there is little option for the self-employed if their bottom-line numbers do not meet refinance program debt-to-income (DTI) ratio guidelines.

One option for a self-employed person that misses the DTI ratio is to add a working spouse, domestic partner, or other adult individual the permanently resides in the home to the refinance mortgage application. The added income could be enough to meet the DTI guidelines and allow the homeowner to refinance.

Unfortunately, adding another person to the mortgage may not be an option, or may not be something that a homeowner wishes to do. Yes, many self-employed people have been painted into the corner with the current refinancing loan restrictions.

You might also ask why mortgage lenders are not doing more to help out homeowners, self-employed or otherwise, after taxpayer dollars came in to save their behinds? At the moment, the mortgage lenders are fending for themselves and are not required to make loans if they do not wish. It’s unfortunate that the TARP bailout money given to them did not have any strings attached in this vain.

In fact, bank balance sheets are getting stronger and stronger with many of the fat cats actually paying back TARP funds to the government. Still, no relenting on mortgage underwriting guidelines and little help for those trying to get a loan modification.

President Obama has recently put some political pressure on the banks to begin lending once again, but it’s a tough industry to lobby. We’ll have to wait and see if any future legislation or other governmental action with teeth can help to open up the lending guidelines in the near future, but it is going to be tough.

It may not be until the economy and housing markets recover more robustly, that less restrictive refinancing mortgage programs are offered for the self-employed and other homeowners that would benefit significantly with a home refinance.

If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Mortgage Refinance Rates Set Another Record Low – How Long Will it Last?

2009-12-09T10:37:00.000-05:00

The mortgage refinance rates environment hit another record low last week. The average interest rate for a 30-year mortgage dropped to a record low of 4.71 percent. The previous record of 4.78 percent was set during the week ending April 30 and matched last week. The average rate on a 15-year fixed-rate mortgage fell to a record low of 4.27 percent, from 4.29 percent last week, according to Freddie Mac.

As the Federal Reserve continues to pump funds into mortgage-backed securities, rates have continued to drop. The continued rush of investors into the security of US Treasuries has also lent a heaping dose of rate drop in recent weeks.

In the face of recent historic low refinance mortgage rate news is the loan qualification question for many homeowners. Refinancing lenders have tightened their standards dramatically over the past year. Credit score and loan-to-value (LTV) requirements have tightened, while “stated-income” and other reduced documentation loan types have disappeared from the refinancing landscape.

Home prices have fallen, and it is estimated that 23 percent of homeowners with a mortgage, owe more on their home loans than their house is currently worth according to First American CoreLogic, a real estate information company. This is creating a major qualification problem for many American homeowners that could benefit significantly with a home refinance at current mortgage interest rates.

Those that do not qualify for an 80 percent LTV refinance home loan with excellent credit scores should check out an FHA refinance. The FHA loan program currently allows a homeowner to finance up to 97 percent of the value of their home with a qualifying mid credit score as low as a 620. In fact, many borrowers have switched from conventional mortgages to FHA refinance loans for significant savings and benefit at the current low historic refinance rates.

So, how long will mortgage rates stay this low? For those that follow the Refinance Toolbox Blog, you will know that we never predict where mortgage rates will go, but report on the current events impacting interest rates and future events that could move mortgage rates in a significant fashion.

Putting on our “common sense” hat for a second, it would appear that further future reduction to mortgage rates will be minimal at best, with a likelier probability that interest rates will rise. The rise in refinance rates could be significant.

An improving economy could lend itself to a dramatic increase in the 10-Year Treasury yield. The yield has held at historic lows for quite some time as investors like the security during national economic turmoil while inflation is kept in check. As the treasury-yield goes up, mortgage refinance rates will rise.

Current mortgage rates have been kept artificially low due in large part to the US government bailout plan, in which the Federal Reserve is spending $1.2 Trillion to buy-up mortgage-backed securities. This program is due to end in April, 2010, and could have a significant impact to rising mortgage rates.

Although inflation numbers have been kept in check for the moment, a future inflation jump could lend a helping hand to rapidly rising refinance mortgage rates. Many are concerned that the government’s bailout effort will lead to significant inflation down the road. The feeling is that too much money has been printed, which will cause some major inflation problems at some point.

Well, should I lock my rate now?

After a solid refinance pre-qualification, it would not only be a good time to lock your interest rate, but a great time to take advantage of the lowest mortgage rates available since the number has been tracked. The risk that mortgage rates will rise significantly is much greater than the risk that you will lock as rates continue downward.

If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Rates on 30-Year Refinance Mortgages Sink, Match Record Low

2009-12-02T10:59:00.000-05:00

While employment, housing, and the economy in general remain in tough shape, refinance and home purchase mortgage rates have officially sunk to record lows. Last week, Freddie Mac reported that average rates on 30-year mortgages have fallen to a level matching the record low interest rates reached this past spring. Rates for 30-year mortgages averaged 4.78 percent last week, down from 4.83 percent the prior week and equaling the record low reached the week of April 30.

The average rate on a 15-year fixed-rate mortgage fell to 4.29 percent, down from 4.32 percent last week, according to Freddie Mac. The 15-year rate hasn't been this low since Freddie Mac started tracking it in 1991. Rates on five-year, adjustable-rate mortgages averaged 4.18 percent, down from last week's 4.25 percent. Rates on one-year, adjustable-rate mortgages were 4.35 percent for the second consecutive week.

It is important to note that the rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 point for 30-year and one-year loans. The fee averaged 0.6 point for 15-year and five-year mortgages.

So, what does this all mean?

It means that homeowners could very well be in a position to refinance into a historic low mortgage rate and benefit financially for numerous home loan scenarios.

While refinance mortgage rates are so low, lets go over some possible refinancing scenarios that could pack a powerful savings punch for both short-term and long-term loan scenarios.

One option that can produce both short-term and long-term benefits is the regular refinance into a 30-year fixed mortgage. Most qualified homeowners should be able to shave at least 1 to 2 percentage points off of their current mortgage rate. Depending upon the loan amount, monthly savings can be quite significant.

Another option is to refinance for short and long-term goals is to do a debt consolidation loan. Borrowers that qualify normally reduce their overall monthly payments by several hundreds per month with this strategy when interest rates are even much higher than current, so this option could be a huge money-saver for those holding credit card, auto, and installment loan debt.

How about getting that 1st and 2nd mortgage refinanced into one historic low fixed rate? The savings can be quite significant and reduce the hassle of holding 2 mortgages. This could be an especially enticing option for those that currently hold variable rate 2nd mortgages and HELOC loans. The Fed is hinting that short-term rates may be rising soon, which could cause those variable interest rates and corresponding monthly payments to rise significantly.

Maybe it’s time to refinance out of that ARM mortgage? If you are currently in an ARM, your current mortgage rate might not be that bad, but for the reasons mentioned prior, it could be a good time to jump out of that variable rate before they soar up again.

I’ll mention one more power-packed benefit loan scenario and my all-time favorite for taking advantage of today’s low rates. It’s of course, refinancing into a shorter-term mortgage. The caveat here is that your monthly principal and interest will most likely increase, but if you qualify and are comfortable with the new monthly payment, watch out! Those refinancing from a 30-year loan into a 15 year mortgage at today’s rates will typically save anywhere from fifty thousand to the hundreds of thousands of dollars (depending upon borrower’s current interest rate and loan size) in saved interest over the term of the loan. And you might be surprised that your monthly payment does not go up as much as you might think, because of how the amortization repayment schedule works on a shorter-term mortgage loan.

Are those enough options? Enough of a reason to check out a home refinance at today’s rates? Actually, there are probably countless other refinancing scenarios that can produce significant benefits for borrowers at the current interest rates, but I just wanted to go over a few of the major ones.

I try not to be a sales-pitch man with the information provided here, but at current refinance rate levels, many people are eligible for some great financial deals. In today’s tough economic times, any bit of financial relief can be a great benefit for individuals and families across the US. Whether you request information or rate quotes from the Refinance Tool Box, or another place, a home refinance might be worth checking out for your benefit.

If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

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October Home Sales Surge! Good News for Refinancing Homeowners?

2009-11-25T10:23:00.000-05:00

Home sales surged for the second month in a row in October, reaching the highest level in 2.5 years. This nationwide sales event marks a 36 percent increase from the housing market bottom in January.

These beefy numbers are being attributed to first-time homebuyers scurrying to take advantage of historic low mortgage rates, cheap home prices, and to beat the clock on the November expiration of the homebuyer tax credit (the government has since extended the tax credit to April 30 for first-time homebuyers and even added a tax credit for existing homeowners).

In a sobering note on housing, the Wall Street Journal had an article yesterday morning, noting that 23 percent of homeowners owe more on their house than the house is worth. Some states are in especially bad shape with Nevada (65%), Arizona (48%), Florida (45%), Michigan (37%), and California (35%) leading the pack.

So, October’s surge in home sales means that home values will be going up and refinancing homeowners can get a bump in their home’s equity value, right? Well, not exactly, as home values have done little but tread water during the past couple months of solid home sales numbers. People and investors are buying up foreclosed and distressed sale homes at bargain basement prices, so overall home value is staying even at best.

The real question is where home sales and home values will go from here and into 2010. Many in the industry are calling for further home price declines into the spring as homebuyers hibernate during the winter in light of the homebuyer tax credit extension.

Another concern for the housing market is twofold. First, there are a glut of foreclosed homes on the sidelines ready to hit the market. Secondly, job losses are pushing once creditworthy homeowners into default. Borrowers with prime, fixed-rate loans accounted for one in three new foreclosures in the second quarter, the Mortgage Bankers Association said last week. Nationwide, a record 14 percent of homeowners with a mortgage were either behind on their payments or in foreclosure.

So, as you can see, the October Homes Sales Surge feels all warm and toasty to those reading the headlines, but the undercurrent is still a muddied mess.

What does all this home sales and home value stuff mean to refinancing homeowners you might ask? Good question! It means that what you think your home is worth, and what it will actually appraise at could be two very different figures. Since home value directly affects the borrower’s Loan-to-Value (LTV) ratio, which in turn impacts qualifying mortgage interest rates, refinance program options, and home loan program acceptance/denial, it means a lot.

If I have said it once, I’ve said it a million times (and probably have), that refinancing homeowners should do their best in coming to a “realistic” value for their home in the current market during the pre-qualification stage of their home refinance. Yes, that is easier said than done, but at least check online at some of the free home eppraisal sites such as Zillow.com. You can take the online values given with a grain of salt, but at least you will have an idea of what your home may be valued at, and you can cross reference your home against similar and recently sold homes in your area.

Refinance mortgage rates are frightfully low at the moment, so you want to take advantage. Just don’t go into it with your eyes closed. For qualified borrowers with solid home values and adequate equity, it’s a great time to take advantage!

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Historic Low Refinance Mortgage Rates – One Benefit of a Sluggish Economy

2009-11-18T13:45:00.000-05:00

The US economy has seen better days, and to say that our country is in a bit of an economic slump would be an understatement. The jobs picture is as bad as we have encountered in quite some time, with no relief projected for the immediate future.

In fact, much of our middle-income America has had to stomach dramatic declines in their retirement accounts, while the cost of food and energy continues to soar. The wealthy can absorb hits to long-term savings, but the less-than-wealthy people experience a much heavier burden.

I know, that’s all you want to hear is about more economic doom and gloom, and a rehash of the downward spiral in many of our retirement savings accounts.

Duly noted. That is why I would like to switch the focus to a shining star that has come out of our country’s economic mess …. Historic Low Refinance Mortgage Rates!

For many homeowners that are looking to lower their monthly payments, consolidate debts, or lower their loan terms, current mortgage interest rates paint a rosy picture. This is not meant as a sales pitch, but many people are taking advantage of the current rates and realizing benefits in the ten’s of thousands to hundred’s of thousands of dollars in savings over the term of their new home loans.

The point is, that it could be in your best interest (excuse the pun), to see if there is a refinance loan program that will result in a significant benefit for you.

The US government, in it’s bailout efforts, has helped to create our current historic low mortgage interest rates, but that aid is coming to an end soon. Both the government’s buy-back of US Treasuries and mortgage securities are slated to be complete by the early part of 2010. This could present a double-whammy effect on refinance mortgage rates as the 10-Year Treasury Yield could rise in conjunction with a rise in the mortgage spread premium. Yes, mortgage rates could rise significantly in the near future.

Although I don’t predict where mortgage rates will go, one cannot be blind to major headwinds coming around the corner. This reminds me of the old saying to “Strike While the Iron’s Hot”. My new, although not as catchy saying is to “Strike While Mortgage Rates are at Historic Lows because there’s little room left for rates to fall, but a whole lot of room to Go Up”. Yeah, I know, it’s a little lengthy, but I’m working on it!

Keep in mind that if you are planning on taking advantage of the current low refinance mortgage rates, you will need to have a minimum 620 mid fico credit score for either a conventional or FHA loan.

Also, make sure to check online at some of the free home value estimation sites so that you can get a general idea of the value of your home. The housing market is still kind of crazy, so you don’t want to go into the refinance process with blinders on.

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

About Low-Ball Mortgage Refinance Rate Advertisements

2009-11-11T14:54:00.002-05:00

If you have ever shopped for a new car, then you know that the low low advertised price for your auto of choice may not necessarily be the same as the price you are quoted at the dealership. Hey, you want tires with that? Oh, your credit score isn’t over 800? I think you get the point, and unfortunately, many mortgage refinance rate advertisements are not any better.

I just received a mortgage rate advertisement in my email inbox this morning from a major mortgage lending company that gave me a chuckle. The subject line says “Rates drop to 3.59% APR*. Then the message goes on to make sure that I know that I should lock my rate now, before rates rise. Now, those are some really nice folks at that loan company, making sure that they are looking out for my welfare.

Unfortunately, the 3.59% APR asterisk marking does not tell me in the email, what the 3.59% program is, or what the qualifications are. You guessed it, it sounds like the ole Crazy Lenny’s Auto World Emporium sales pitch all over again.

In reality, they probably do have a 3.59% refinance program available, but it’s most likely for an adjustable rate mortgage (ARM) for people refinancing with superior credit and a loan-to-value ratio that is under 80 percent. Heavy discount points are applied, so the lender fees are quite substantial.

Why don’t they just mention that in the advertisement then? Well, I think you’ve got it. First, most people do not want to touch ARM loans any more. Secondly, most people do not have superior credit. Thirdly, most people are refinancing over 80 percent of the value of their homes. Finally, they know that a lot of people would not take kindly to a large lender fee quote.

So, you haven’t visited the Refinance ToolBox, and don’t know these little advertising tricks and decided to apply for this great 3.59% APR refinance home loan. You want a 30 year fixed mortgage, have a decent credit score, and are refinancing 85 percent of the value of your home.

What’s This? You are now told that you are not eligible for a 3.59% APR home loan, and that your real qualifying rate is over 5.0%!! (A 5.0% is actually a great rate that can provide a substantial financial benefit for many refinancing howmowners, but why not just be upfront in the advertisement?)

As the steam evaporates from your forehead, you realize that you’ve been duped. Don’t worry about it, you have a lot of company.

The important point to remember is that you should be very leery about advertised mortgage refinance rates that seem too good to be true, especially if there is no small print in the ad that states what the program is, and what the basic qualification requirements are.

Finally, the question you have to ask your self is …. Do you even want to work with a home loan lender that resorts to trickery in their advertisements, just to get you into their virtual doors? I don’t know about you, but I think I’ll take a pass!

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Cash-Out Home Mortgage Refinance Information

2009-11-04T12:46:00.000-05:00

Many people are looking to do a cash-out home refinance in today’s tough economy, so I thought it was an important time to recap the major points of a cash-out refinance.

First, you might wonder what is construed as a cash-out refinance. The first cash-out refinance scenario is obvious, you refinance your first mortgage and take cash out against your home’s equity. The second scenario for a cash-out is where you refinance your first mortgage and second mortgage (if applicable) and consolidate bills such as credit cards and installment loans into your new home loan.

The third scenario classified as a cash-out refinance is where you refinance your first and second mortgage (or HELOC) when your second mortgage was not taken out on the same day as your fist mortgage.

So, why is it important to know whether your loan scenario is classified as a cash-out refinance or a regular rate-term refinance?

It’s all in the Loan-to-Value Ratios (LTV) allowed. Earlier this year, both conventional and FHA loans capped the maximum LTV allowed for cash-out refinance loans. The limits were dropped from a high of 95 percent down to 85 percent.

Now, a ten percent drop may not seem like much, but it can mean the difference between a great loan scenario to a lesser benefit loan scenario to an outright undoable refinance mortgage. Considering the nation-wide drop in home values over the past couple of years, that 10 percent drop in LTV has hit home hard for many that could benefit with a cash-out refinance mortgage.

Also consider that most cash-out refinancing homeowners are rolling their closing costs back into the new loan. So, if you want to refinance your current mortgage balance of $150,000 and consolidate $50,000 in credit card and installment loans into a loan program that has $5,000 in closing and settlement costs, your home will need to appraise for at least $241,176. ($150,000 + $50,000 + $5,000 = $205,000 divided by .85 = $241,176).

Under the old 95 percent LTV limit, your appraisal for this same scenario could come in as low as $215,789 ($205,000 divided by .95 = $215,789).

As you can see, a ten percent drop in LTV may not seem like much, but it has a very significant impact on higher LTV loans.

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

How About a Little Service with those Low Mortgage Refinance Rates?

2009-10-28T15:53:00.000-04:00

Sometimes, we in the home loan mortgage refinance business tend to spout out at the mouth about the current state of interest rates, program options, loan scenarios, and on and on, yet customer service is rarely mentioned. Yes, this is extremely important, yet an often overlooked aspect of the borrower’s refinance lender decision.

Quality home loan lender service is crucial to both the mortgage pre-qualification stage, as well as the actual loan process stage.

Sometimes, a loan officer will act more as an order taker than an actual advisor. Either through inexperience or the “Asking Less Leads to More Sales” approach, the borrowing customer is really short-changed and may not even know it.

Ideally, you want to work with a loan advisor that will take an interest in your financial goals and ask questions about your loan scenario. Many times, there is a much better program for your particular objective and timeframes that can go undiscovered because of an order-taker mentality. I don’t know about you, but throwing up to tens of thousands of dollars out the window would get me a little hot and bothered, when a few extra questions would have made the difference.

Good service also means answering all customer questions in a courteous and timely manner, discussing possible loan scenarios is your appraisal comes in at X, instead of Y, preparing breakeven analysis and total benefit reports, and relaying your home loan options in a clear to understand manner.

I can’t tell you the number of people that call the Refinance Toolbox, complaining that an advisor with Lender X will not answer their phone or email. Let alone the number of times a homeowner has been pre-qualified with bad or even “unrealistic” loan programs.

In the loan processing stage, you want your lender to run like a well-oiled machine. This does not mean that unforeseen loan issues won’t arise, appraisals will come in perfectly, etc., in every case. It means that your lender will have a clear and concise loan process initiated by experienced and trained staff for your particular loan product. It also means that you have total access to your loan process, loan advisor and processor …. You should be informed during your home loan process.

So how do you tell if you’re speaking with an order-taker or the real deal? If your loan advisor did not already explain their mortgage experience, give you a thorough pre-qualification, and explain their company loan process, just Ask!

Your home loan refinance is a huge decision, so you want to make sure that you have as much information as possible about your potential new mortgage lender. You Deserve It!

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Refinancing Into a Lower Term Mortgage Can be a Great Investment

2009-10-21T11:25:00.000-04:00

Everyone wants a great high yielding and low risk investment opportunity, but seldom does one think of a home mortgage in that light. Yet, for many homeowners, refinancing into a lower term mortgage can be a great long-term investment strategy, especially when refinance rates are as low as they are currently.

For instance, suppose you currently have a 6.5% 30 year fixed rate mortgage that you took out 2 years ago. The total interest on that loan over the entire term of the loan amounts to $318,861, of which you have already paid $32,000.

Now, if you refinanced into a $250,000 15 year fixed rate mortgage at 4.5%, the total interest on your new home loan would only amount to $94,247 over the 15 year term.

So lets recap. The 30 year interest of $318,861 less the $32,000 already paid less the $94,247 total interest for the 15 year fixed mortgage results in a net interest savings of $192,614 by refinancing to the 15 year option.

Now you might say that is better than grits and gravy, but the payment goes up. In this example the monthly payment would increase by $332.

Most people scoff at the idea of increasing their mortgage payment, but I would suggest that you consider it an investment and a Great Deal!

Think about it. We may never see the current historic low interest rates ever again after we dig out of this national economic mess.

In this example, which is pretty typical, the homeowner would be investing in a sure $192,614 profit by paying an additional $322 per month into their own home! Better yet, the IRS is not going to take 50% nor 28% nor 15% of that profit …. Wer’e talking a tax-free investment!

I don’t know about you, but I seldom run into such safe and prosperous tax-free investment opportunities.

Not to mention that your mortgage paying days will be over in 15 years as opposed to 28 years. For those in their 20’s, that may not seem like an issue, but the prospect becomes much more important to those over 30 years old.

All that said, there is a risk to this investment strategy. If you cannot make the increased monthly payment, then you can run into a major problem and possibly risk losing your home.

It is ultra-important that you can make the increased payment comfortably. Even if the qualifying debt ratios say that you are good, you need to make a real-world assessment considering your current employment and monthly budget.

If the budget checks out, then you could be on your way to making one of the best investment decisions of your life by refinancing into a shorter term home loan while mortgage refinance rates are so low.

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Cost of Waiting for Lower Mortgage Refinance Rates

2009-10-15T10:59:00.002-04:00

If you have been following mortgage refinance rates over the past month, you will have noticed that rates have dropped to near the historic low levels experienced earlier this year. Many refinancing homeowners that sat on the fence earlier this year have been quick to jump in on this latest mortgage rate drop and lock their loan.

Yet, there are others that are waiting to refinance in the event that interest rates drop even further. This is fine strategy if current refinance rates are not creating a benefit that will help you much. But for those sitting on a significant financial benefit at current rates, this could end up costing you up to tens of thousands of dollars in the long run, even if you do eventually refinance at a lower-than current interest rate down the road.

For example, suppose that you currently have a 1st and a 2nd mortgage totaling $250,000 that you want to refinance into one low fixed rate 30-Year home loan. Your current combined principle and interest (P&I) monthly payment is $1,622. You can refinance today at 5.0%, which would result in a new P&I payment of $1,342. Your total monthly savings would be $280.

You hold off on your refinance plans because a so-called “expert” on CNBC says that rates could go down further in 2010 (no one knows where rates will go next week, let alone in 6 months to a year!).

Now, assuming that things go your way and mortgage refinance rates do drop to 4.75% 6 months down the road your new P&I payment would be $1,304 per month. You will then be in a deal that is $38 per month better than if you had locked 6 months earlier. That’s great, but don’t forget that you had a $280 benefit 6 months ago, so you lost out on $1,680 in savings. It will take you 44 months to make up the difference ($1,680 divided by $38).

Is that really worth the risk? Suppose interest rates actually go up from here or take a year to drop to 4.75%? (In which case, it would now take 88 months to make up the initial savings difference).

What if things don’t go your way and refinance rates go up and don’t retreat back to even 5.0%? If you hold off on locking for a better deal and never end up refinancing, it will have cost you $100,800 in lost savings over the term of the current-rate proposed loan in this example.

Hey, everyone wants to get in at the absolute bottom, whether it be the stock market or mortgage refinance rates, but the truth of the matter is that few ever do. And the ones that do get in at the bottom can mostly be attributed to blind luck.

The moral of the story is that if you are staring at a significant financial gain with current historic low mortgage refinance rates, be very careful about holding your rate lock decision for hopes of lower interest rates. It could cost you dearly in the long-run.

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

Refinance Tool Box

May the Mortgage Refinance Rates be with You!

Mortgage Refinance Rates Still Near 5.0 Percent

2009-10-07T12:01:00.004-04:00

The steadiness of mortgage refinance rates over the past month or so has been a welcome change from the interest rate roller coaster ride experienced over the past couple of years. In fact, we are now near the historic low home loan rates of Spring 2009.

There seems to be a standstill at the moment as the unsettled economy is drawing investors into and out of the security of treasury bonds, maintaining the low yield in a tight range and keeping refinance mortgage rates a nice bargain.

Home values and credit scores continue to be the major determining factor for qualification into these great rates. FHA refinance home loans continue to offer low rates to those with credit scores as low as a 620 mid fico and you can have a loan-to-value (LTV) ratio up to 97 percent.

For those looking for conventional loans with no PMI, your home value will be critical. Don’t forget to include your closing costs into your total loan amount in calculating your qualifying LTV if you are not paying for closing costs out of pocket. You will need to be at an 80 percent LTV or lower to eliminate PMI.

The housing value picture is still muddied, but looks a whole heck of a lot better than it did even a few months ago. The latest home sales numbers have been rather positive and we have even experienced home values increasing in many markets…. Hip Hip Hooray!!

Now, before we pop the cork on the champagne, there are also some troubling housing market variables that lurk around the corner. There are apparently a huge number of distressed homes waiting to hit the sales market. Banks have been holding these foreclosed homes for various reasons, but they could soon hit the sales listings. This could be a big hit to an already unsettled outlook.

Not to mention the jobs picture. Unemployment numbers continue rise as corporations work to improve their balance sheets. This is also putting a damper on housing activity.

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Current Low Refinance Mortgage Rates and Home Loan Term Reduction

2009-09-30T12:18:00.000-04:00

Way back in the early part of 2009, the refinance mortgage rate spread difference between a 30-year fixed rate mortgage and a 15-year fixed rate home loan was virtually negligent. Many refinancing homeowners opted for the 30-year mortgage and the lower payment, since the cost of the interest rate was pretty much the same. The feeling was that the borrower could pay extra toward the principle to reduce their loan term or simply take advantage of the monthly savings for something else. The key was that the option was in the hand of the homeowner to make that decision.

Fast-forward to present and the interest rate spreads are vastly different. 15-year fixed rate mortgages are much cheaper than their 30-year counterpart.

For instance, I just ran a rate search for a loan scenario with a $250,000 home value, $200,000 loan amount and a 760 credit score. The closest to par or “even’ rate for the 30-year fixed is at 4.875%, while the closest to par for the 15-year fixed is 4.25%.

Yes, there is currently a significant reduction in rate for shorter-term loans.

If a refinancing homeowner took the 30-year mortgage option for their new $200,000 home loan, their monthly principle and interest payment would be $1,058 and total interest paid for the term of the loan would amount to $181,029.

Taking the 15-year option would result in a monthly principle and interest payment of $1,504 and total interest paid over the term of the loan would be $70,820.

The interest saved by choosing the 15-year refinance is $110,209!

Now, you might say that is all well and good but the monthly payment difference is $446. That is why it is extremely important to take the new payment into consideration before refinancing into a shorter term. You must be comfortable with the new payment.

Also consider that the increase in monthly payment may not be as significant from your current payment, because mortgage refinance rates are currently so low.

For example, if the borrower in the preceding example is refinancing from a $200,000 30-year mortgage taken out 2 years ago at 6.5%, their current monthly payment for principle and interest is $1,264. Refinancing into the 15-year option would result in only a $240 per month difference, plus a reduction in loan term of 13 years along with total interest savings of around $200,000.

Also, for those consolidating debts, a term reduction can lead to a lower overall monthly payment in many cases.

The long and the short of it is that there are many options to save significant dollars when mortgage refinance rates are as low as they are now. Planning your benefit in conjunction with your new mortgage timeframe is a smart way to go.

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Refinance Mortgage Home Loan Demand Soaring Again

2009-09-23T10:26:00.000-04:00

The cure for sagging refinance mortgage application numbers is a good ole drop in interest rates, and that is exactly what has happened over the past several weeks. The combination of a consistent low 10-year Treasury yield and a falling mortgage spread premium has national average refinance rates for 30-year fixed rate home loans dipping below 5.0 percent for the first time since March of 2009.

To put a little perspective on the current mortgage rate picture, last year at this time, interest rates were over 6.0 percent.

The MBA's seasonally adjusted index of refinancing applications increased 17.4 percent to 2,881.5, its highest since the week ended May 29. Much of this may be due to the refinancing homeowners that stood on the fence earlier in the year, missing their rate lock opportunity before rates went up to 5.5 percent later in the summer. Now that par rates are under 5.0 percent for many home loan refinancing programs, the fence sitters have decided to jump on the opportunity and get over the fear that rates could drop even further.

In reality, the risk for rates to go up from here is much greater risk than waiting to see if rates come down. You might be risking the possibility for a 4.75 percent average market interest rate if rates drop for a 6.0 percent or higher rate if the mortgage market turns.

In other good short-term news, low mortgage rates combined with the government’s $8,000 tax credit stimulus bill for first time homebuyers has helped to stabilize the housing market. We actually had a slight price gain in housing for the last reporting month. We’ll take it!

As always, if you are considering a refinance, make sure to get a solid pre-qualification before you apply for your new home loan. Yes, it may take a little extra time on the phone with your home loan consultant, but it will be more than worth the effort.

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Mortgage Refinance Rates Still Hovering Near All-Time Lows

2009-09-16T12:29:00.000-04:00

The year 2009 has been great for mortgage refinance rates. We started off the year with a bang, as interest rates for 30 year fixed mortgages dipped below 5.0% for a brief period, before gradually climbing back up to the 5.5% level into the summer.

Fortunately, for those that missed their lock opportunity earlier in the year, rates have once again dipped to near historic low levels.

Mortgage refinance rates have been helped by the consistent 10-year treasury yield that has held near the 3.5% level for quite some time. The mortgage spreads have also come down with this recent mortgage rate dip.

Added to these mortgage rate-reducing factors, the US government recently plunked down billions to buy mortgage-backed securities that have been glutting the market. This may be helping to free up some lender and investor capital back into the mortgage markets.

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

FHA Mortgage as an Alternative to Jumbo Conventional Loans?

2009-09-09T16:16:00.000-04:00

There are many people that purchased homes in the “high-cost” areas of the country during the great real estate boom of the mid 2000’s. A rather larger percentage of these home loans were either adjustable rate mortgages or high loan-to-value (LTV) loans that carried a higher rate of interest.

With mortgage refinance rates being as low as they are now in the home loan market, it makes a lot of sense for these folks to refinance out of that adjustable rate or into a much lower fixed rate at present time. The problem for many of these homeowners is that the rapid decline in home prices over the past couple of years has tapped most of the remaining equity in their homes, and conventional refinance mortgage rates are relatively high for LTV’s over 90%, plus the ever skyrocketing cost of monthly private mortgage insurance (PMI) for conventional loans.

Another hurdle to folks in the expensive neck of the woods is to find competitive refinance rates for home loans over $417,000, which for the most part, are currently priced at a higher rate of interest for Jumbo conventional mortgage status.

One way to potentially sidestep this issue is to inquire about an FHA refinance home loan. In many high-cost areas, FHA loan limits far exceed the $417,000 cap imposed on conventional loans, and still give you rock-bottom current market interest rates.

Another benefit of the FHA mortgage is that you can refinance up to 97 percent of the appraised value of your home and not have to worry about your interest rate going through the roof. In a declining housing market, where your LTV is tight, this can give you a little extra breathing room as compared to a conventional home loan option.

It is important to note the FHA refinance will require a 1.75% upfront mortgage premium (UMP) that is added to the loan amount, but not included in the LTV calculation. Make sure to get your rate quote with the (UMP) added into the loan amount so that you have the “bottom-line” numbers for your home loan comparisons.

On the refinance mortgage rates front, rates continue to hold steady at near historic low levels. The mortgage-spread premium has declined a bit, and the 10-year treasury yield continues to be kind.

The housing value front is still a bit muddied as both pending and sold sales figures have improved in recent months, but the word on the street is that another wave of home foreclosures is about to hit the market.

All in all, just another crazy week in the world of home mortgage refinance.

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

A Deeper Look into Refinance Closing Costs

2009-09-02T15:14:00.000-04:00

Now, I know that most everyone hates the closing costs associated with refinance home loans. In fact, most people feel that any cost or fee for a new mortgage is completely unacceptable. But, before you hang up the phone on your friendly loan officer upon the first mention of mortgage closing costs, please review the whole financial picture for your mortgage scenario, or you may be throwing tens of thousands of dollars in benefit out the window for spite.

First things First. There are actual and legitimate costs associated with a refinance mortgage home loan. Fees must be paid for title searches, attorneys, title insurance, closing agents, etc. Also, depending upon your state of residence, there may be a state mortgage tax. Most home refinance lenders will also charge a fee for your application and loan processing along with an underwriting fee, which are real overhead expenses incurred by your mortgage lender of choice.

First things Second. Most lenders will also charge an “origination’ fee, which is a percentage of your total loan amount and the real place where a lender makes their money, since the previously mentioned costs go to either third party vendors or for operating overhead, the origination fee is where the real profit lies.

First things Third. A borrower may choose to “Buy-Down” their interest rate using discount points, which are added upfront to closing costs. One discount point equals one percent of your total loan amount. A lender does not typically make any money when a borrower uses discount points, except in the case of a mortgage broker that sells a borrower a higher rate of interest than the “Par” or “Even” interest rate, whereby the broker receives a rebate back from the bank holding the mortgage.

As you might guess, refinance closing costs can add up rather quickly, especially for those utilizing discount points and for those that have rather large total loan amounts. A potential borrower may look at the bottom-line closing cost amount and quickly jump to the conclusion that their lender is trying to rip them off, but that is most likely not the truth. What you may view as a large closing cost sum could be one of the best long-term investments you will ever make.

As previously mentioned, a home mortgage lender really makes their money or profit from the origination fee that they charge, since all other costs are going to cover third party vendors and the overhead cost of running their business, including the processing of loans.

If the refinance lender charges, say a 1% origination fee on a $300,000 loan amount, that leaves $3,000 for the coffers. Now, you might feel that is even too much, but consider the following.

Of that $3,000, your refinance lender has to pay the loan officer that handled the loan, which generally may be a 50/50 split. The remaining $1,500 will then be hacked down again for a loan loss reserve, which could be as high as $500, leaving $1,000 for lender profit.

Now consider that the $1,000 profit is for a loan, which of course, closed. As we all should be aware, a percentage of mortgage applications never make it to closing, yet the lender has invested time, resources and money into these loans at a loss, which eats into the profit of successfully closed loans.

You now may be getting an idea to one of the reasons why so many mortgage lenders have closed their doors in the past several years.

From a mortgage borrower’s perspective, it is easy to understand why the “alert” radar kicks in after reviewing their good faith closing costs totals, but that may be an uninformed assessment at first glance.

Yes, there are mortgage refinance lenders that charge more than others, and may inflate processing, application, and title fees.

Also consider there are huge loan processing and customer service differences among home loan lenders. Comparing lenders on fees alone, without taking their “service” level into account could be a costly error.

The preceding closing cost information is meant as a general overview of closing costs and how lenders make their money, but is not how every lender operates. In any event, the information should give you a better general understanding of refinance closing costs and in an odd sort of way, actually make you feel better about them when you understand that your lender is not socking away all those closing costs into their pockets.

Now to the moral of the closing costs story:

Say you are offered a competitive refinance rate on a new 30 Year Fixed Rate home loan that will save you $200 per month. The total closing costs amount to $3,000, which are rolled into your new loan. The closing costs will have paid for themselves in 15 months ($3,000 divided by $200). If you stay in you new mortgage for more than 15 months, it looks like a good deal. If you stay in your new mortgage for the loan term, you will have saved $69,000 in total (360 months minus 15 months breakeven times $200/month savings), which is a great deal.

If you scoffed at the deal originally because of the $3,000 closing costs, that could come back to haunt you in the future. Also keep in mind that most refinance closing costs are rolled back into your loan amount so you are not paying that money out of pocket at closing. In a sense, you are using the mortgage lender to finance your long-term benefit, just like big business operates. If your timeframe for your new mortgage is longer than the breakeven point, then closing costs can be viewed as a great deal, and smart business.

Having the proper perspective on refinance closing costs is particularly crucial with today’s refinance rate environment, as interest rates are pretty much at historic lows. If you reject a new home loan deal because you deem that closing costs are too high, your “benefit” time horizon may pass you by as interest rates rise. Always look at your bottom-line benefit and your expected loan timeframe before closing the door on a potential home refinance opportunity.

Working with a lender that quotes upfront and guaranteed closing costs will be a big help for a refinancing homeowner. Your prospective new lender should be able to detail all closing and settlement costs, plus go over your breakeven analysis with you. In the end, the numbers will tell the story and you can act in your own best interest based on your bottom-line benefit in conjunction with your loan timeframe. The numbers just may result in a very pleasant surprise for you, even with closing costs.

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Refinance Mortgage Rates Still Holding Low as Home Prices Stabilize

2009-08-26T10:16:00.000-04:00

Alas, some good news pertaining to the overall general economy and the world of home mortgage financing. Home prices posted their first quarterly increase in three years, signaling the housing market just possibly is turning the corner, while mortgage rates continue to hug the lower end of the spectrum.

The Standard & Poor's/Case-Shiller's U.S. National Home Price Index released Tuesday rose nearly 3 percent from the first quarter to 133. The monthly index of 20 major cities increased 1.4 percent from May to June to 142, the second straight month the index registered a gain, but still way too early to hold a celebration party.

Home prices still have a long way to go to recover completely. In reality, home prices have fallen 30 percent from the peak in the second quarter of 2006. That said, even a clear stabilization in home prices would be a victory in the near term. If continued positive housing numbers extend into the 3rd quarter, that will go a long way toward the easing of refinance and home purchase mortgage lender restrictions, along with a possible further decline to the mortgage spread premium.

Of course, there would be nothing better for the overall economy than to have a stabilized housing market. The financial healing will begin and the jobs picture will become a whole lot rosier.

Just like predicting where refinance mortgage rates will go from here, predictions of the housing market recovery are not worth much. Just like with weather predictions, most forecasters are fairly accurate in the short-term, but the long term forecasts usually fall apart.

Earlier this week, Fed chairman Ben Bernanke declared the global economy is beginning to emerge from its worst crisis in generations, the emphasis will be on whether central banks continue to work together to prevent a crisis like this from happening again or if each will take its own path to assure the path to recovery is smooth.

There has also been a revisiting of the packaged mortgage CDO investments by a number of banking institutions. Although no standard pricing model has been adopted, some banks appear to be packaging those underwater mortgage debts alongside its AAA rated mortgages and marketing them as they are, with no pretense. If this type of investment vehicle takes hold, the entire financial system could be purged of it’s toxic debts and really open the mortgage lending industry up full throttle. The idea sounds nice on paper, but don’t hold your breathe if this latest toxic debt effort falls on its face.

Mortgage rates are still holding at low levels. The treasury yield has been bouncing back and forth, but really seems to have been hugging that 3.5% mark since early July. That is good for mortgage rates and good for those still looking to refinance their home loan or debt consolidation.

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Refinance Mortgage Applications Rise as Home Loan Rates Fall

2009-08-19T09:40:00.001-04:00

Home refinance applications rose last week as mortgage rates fell to a five-week low. The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended August 14 increased 5.6 percent.

There appears to be two factors at force here driving down mortgage rates.

First is the decrease in the mortgage spread premium. Remember that it is the combination of the mortgage premium plus the yield on the 10-Year Treasury bond that makes up the interest rates for home loans that are offered to consumers. Earlier this year, the mortgage spread premium was at a whopping 3 percent when the treasury yield plummeted to near 2 percent. When considering the current bond yield to the national average mortgage rate for a 30-year fixed home loan, the resulting mortgage spread premium is now sitting at near 2 percent. That is a nice drop within one-years time.

The second reason for the recent drop in home loan mortgage rates is the decline in the 10-year treasury yield. Within the past five weeks, we have shaved nearly one-quarter percent off the yield, which is good for mortgage shoppers. The most likely culprit for the drop in yield is the reversal trend to the huge stock market bounce coupled with nice long-term projections of stable inflationary numbers. When inflation is in check and investors need a place to park their money, US bonds are often used, driving the yield down.

Although housing numbers have been much better as of late, many are still skeptical of calling a housing market bottom. Home inventories have decreased, but may be the result of the summer buying market coupled with the $8,000 tax credit incentive offered to first-time homebuyers by the US government. There are also slew of homes waiting to hit the market from “held-up” home foreclosures.

Where refinance or home purchase mortgage rates go from here is anyone’s guess, but if you are in the market for a new home loan, you may consider dipping your toes in the water here. It has been a great year to lock rates when they dip, which is currently the case for refinance mortgage rates.

If you are considering a refinance now and need some help, have questions, or need some competitive rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box