UFMIP Set to Increase for FHA Refinance and Purchase Mortgage Loans

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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FHA Refinance and the Upfront Mortgage Insurance Premium (UFMIP)

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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Mortgage Refinance Rates Drop on Week

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

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!

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October Home Sales Surge! Good News for Refinancing Homeowners?

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!

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Current Low Refinance Mortgage Rates and Home Loan Term Reduction

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!

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Refinance Mortgage Home Loan Demand Soaring Again

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!

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Mortgage Refinance Rates Still Hovering Near All-Time Lows

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!

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FHA Mortgage as an Alternative to Jumbo Conventional Loans?

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!

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Mortgage Rates Dip on Treasury Yield

In what turns out as good news for lower mortgage rates, the 10-Year Treasury yield has continued it’s downward trend for the past several days. In a big today, the yield is currently down .171 percent, which is a huge one-day move. Expect mortgage refinance rate pricing to get better later today and into tomorrow.

For those that have been waiting for rates to drop, we may be hitting the “sweet” spot in the market on a short-term basis. Both conventional and FHA programs are reflecting some very nice options.

If your refinance timeframe is in the one to three year range, there are many attractive refinance program offerings with no lender fees and some with lender rebates. This could be an attractive and financially beneficial option, especially for those that want to consolidate debts.

If your refinance timeframe is long-term in the five to thirty year range, then you may want to consider some of the “lowest” rates offered options, as the leverage buying power of discount points have also lightened in recent days.

There really hasn’t been much earth shattering news this week to cause a major shift in financing options, but the overall trend in the investment market has been a flight to safety, and hence the dance to bonds and lower treasury yield. How long this will last is anyone’s guess, so locking your mortgage refinance rate here could be a wise decision if your refinance is resulting in a significant benefit for you. Just ask the people who waited to lock when the par or even interest rate on a 30 year fixed mortgage was sitting at 5.0 percent. We are actually nearing a par 5.25 percent now. The getting is good for those that qualify.

Yes, rates are good, but keep in mind that property values are still on the decline. Make sure that you are using a realistic fair market value for your home when applying or even pre-qualifying for a refinance loan. Using an inflated or unrealistic home value can only come back to haunt you later in your home loan process if your home’s actual appraised value comes in low to the point that it either changes your loan-to-value ratio (LTV) and resulting interest rate, or possibly ruins your deal by falling out of the LTV parameters for the loan that you applied for.

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!

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Treasury Yields Down and Mortgage Spreads Up = Flat Refinance Rates

After the battle at the 4.0 percent mark of the 10 Year Treasury Yield on June 10, we have experienced a rather nice retreat by more than ¼ percent in the past couple weeks, yet you may have noticed that mortgage refinance rates have remained somewhat flat in the interim. That is because of the increase in the mortgage spread premium that investors and lenders are adding to the interest rates to make up for their perceived risk of inflation, housing values, and other pesky economic perils.

The good news is that although, the mortgage spread has gone up, refinance rates are still looking very good at present levels.

The bad news is that lender underwriting is getting even tougher and home appraisals continue to drift downward in many home markets. The hardest hit home value states continue to be Arizona, California, Florida, and Nevada.

That is why I continue to harp on home values and how important it is for refinancing homeowners to check among the multitude of free online home value checkers. Even though interest rates are still nice and pretty, it will do you no good if your quoted refinance home loan rate and program is pre-qualified based on a higher than realistic perception of the value of your home. Depending upon the mortgage program you are applying for, your loan rate could go up, monthly mortgage insurance can enter the equation, or your loan could be outright declined if a lower than expected home appraisal comes in.

Of course, most of us know there are no guarantees at what number a home appraisal will come in at, but, you can increase your odds of home value accuracy at the onset by doing a little online research. A good lender will also check value numbers for you before you apply for your refinance loan, but don’t count on it.

Many of you will benefit significantly by refinancing into current low mortgage rates, but the accuracy of your pre-qualified numbers are very important. Accurate information for income, credit and home value at application will go a long way toward getting your new home mortgage closed efficiently, while avoiding potential headaches during the loan process.

Today, the FOMC begins its two-day meeting and mortgage industry is looking for some clarity on its economic outlook. As far as mortgage refinance rates are concerned, look for anything in their upcoming announcements relating to shifts to their November 4 announced purchase plan for mortgages, agency debt, and treasuries. Also look for any insight into how long it will keep current overnight lending rates intact.

The FOMC meeting announcements will result in mortgage refinance rates either going up, going down, or staying flat. Now, if that isn’t a wishy-washy statement, I don’t know what one is! In reality, barring a drastic announcement either restricting or bumping-up their mortgage related purchase plans, I would suspect things to remain even-keel on their announcement.

On the home value front, May existing home sales rose less than expected. Home sales rose 2.4 percent to a seasonally adjusted annual pace of 4.77 million, up from a downwardly revised rate of 4.66 million in April. About one in three homes sold last month was a foreclosure or distressed sale, dragging down the median price to $173,000 -- 16.8 percent below a year ago. Falling prices coupled with new rules for property appraisers have caused many transactions to fall apart or be delayed.

Yes, that pesky home value issue still remains a problem for many that could benefit with current low mortgage rates.

Rate/Term FHA loans continue to be offered at up to 97 percent LTV with conventional type interest rates, and can be a big help to those refinancing in hard-hit home value areas. For those that have a solid qualifying LTV refinance scenario under 80 percent with good to excellent credit, the mortgage rate world is still your oyster.

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!

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Small Dip in Weekly Mortgage Rates Meets New Housing Data

For a while last week, there were many nervous refinance lenders and loan officers staring at the yield on the 10 Year Treasury. Intra-day, it pushed passed the 4.0 percent level, but closed below that pivotal mark. Many in the industry believe that a true breach of the 4.0 percent yield level could mean rising mortgage refinance rates.

Since the yield held at the key resistance point last week, we have actually had some nice downward action by almost one-quarter percentage point. Mortgage refinance rates have dipped a bit in movement with the yield as anticipated.

On a more longer-range mortgage related outlook, some key housing data was released today. On the surface, the numbers look great, but a deeper read into the numbers does not fare well for home prices in the near term.

New housing starts in May jumped by 17.2 percent. That nice number is still 45.2 percent below the housing starts at the same time last year. Another seemingly good bit of news was reported that applications for building permits jumped by 4 percent in May, and is usually a good sign of future housing activity.

In more normal times, these would be welcome signs of increased economic activity, but with the huge housing supply overhang already in place and with more supply expected due to heightened foreclosure rates, these numbers are not particularly helpful to a housing market already plagued with depressed prices.

In reality, builders are still being very cautious as home supply continues to build. With foreclosures and other distressed properties for sale at deep discounts, builders often can't compete. Rather than launching new developments, they are waiting for signs of a broader recovery.

This latest news is all the more reason for people considering a home refinance to react quickly to current mortgage refinance rates if their view is long-term, if they need to consolidate debt, or switch to a low fixed rate from a current variable rate home loan.

Why jump now? If home values continue to descend, it could very well knock a refinancing homeowner from reaping a current significant financial benefit, to a future non-beneficial or even non-qualified home refinance scenario.

Couple that with the fact that the future risk to the upside for mortgage refinance rates is much greater than a move to the downside at current levels and I think you get the point.

The key is to speak with a lender that can guide you through a thorough pre-qualification and give you the bottom-line financial options for your current refinancing scenario. It very well could be that your refinancing plans should in fact wait, but if there is true pre-qualified and significant benefit waiting on the table for your now, you just might want to jump into the pool.

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!

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Treasury Yield Creeping Up While Mortgage Refinance Rates Level

The 10-Year Treasury Yield has breached 3.5% to the upside intra day, a level we have not witnessed since last November. Part of the reason for the reversal in fortune is due to the major upswing in the stock market off its 2009 lows. As investment money flows back into stocks, it is taken out of government bonds. Also, the government bond buy-back program is running its course as of late. As more US bond supply hits the market (to pay for the immense government spending programs), bond prices continue to drop and the yield increases.

Normally, a significant rise in the 10 Year Treasury Yield would result in higher mortgage rates, but this latest bump-up in the yield has been tempered by what appears to be a drop in the mortgage spread premium, which is keeping refinance rates at nice levels still.

With that said, it might be a good time to lock that rate now, if you are qualified for a current mortgage rate producing a nice financial benefit for you. If the government does not announce any more buy-backs or toxic debt fixes in the near future, interest rates could go up rather sharply because the housing and job markets are still projected for further pain.

U.S. home prices are at levels not seen since the end of 2002. The Standard & Poor's/Case-Shiller National Home Price index reported home prices tumbled by 19.1 percent in the first quarter 2009 compared to the first quarter last year, the largest drop in its 21-year history. Home prices have fallen 32.2 percent since peaking in the second quarter of 2006.

Unfortunately, there is still no evidence of a bottoming in the housing markets.

That’s the bad news, but for those with equity in their homes, refinancing into lower rates is still looking great. Remember that for cash-out refinances, you will pretty much be limited to 85 percent of the value of your home. For higher LTV Rate/Term refinances, FHA is still offering great mortgage rates at up to 97 percent of the value of your home.

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!

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Calm, but Good Week For Mortgage Refinance

During the past couple months, it seemed like a new major event was occurring each week relating to home loan refinance. Big news on government plans causing rates to plummet, while loan program restrictions increased. Housing values, construction numbers, employment, and the stock market bounce caused quite a joy ride on the refinance front.

It’s nice to catch your breath every once in a while, and the past week has allowed just that. Mortgage rates had been steadily rising off the 3.0 percent breach of the 10-Year Treasury Yield, but the last several days has brought a reprieve for the rate sensitive consumer, allowing them to lock rates at near all-time lows once again.

On the home value front, The National Association of Realtors said today that the median sales prices of existing homes declined in 134 out of 152 metropolitan areas compared with the same period a year ago. Prices rose in the other 18 cities. The median home sales price nationwide was $169,900, down 13.8 percent from a year ago. The median price is the midpoint, which means half of the homes sold for more and half for less.

It is expected that home sales will increase into the second half of this year, and that could finally bring the brakes to falling prices. Home price stabilization would be just the kick-start we need for a healthy home mortgage lending environment and a revitalized economy.

I keep getting the question “Are rates going to drop further”? Unfortunately, I do not know whether they will or not. There are too many major variables (currently volatile) involved to give any mortgage to give a prediction with any degree of accuracy at all.

About the only thing that I do know for certain is that mortgage rates are currently at historic low levels for conventional and FHA refinancing programs.

Remember though, the best deals for conventional are for 80 LTV and under loans for those with good to excellent credit. FHA also has great deals for over 80 LTV loans for those with a 620 mid credit score or higher, but the cap LTV for a cash-out refinance is at 85 percent, while a regular rate-term FHA refinance remains at 96.5 percent.

Holding off now for lower rates in the future could be a risky proposition on your part if you are pre-qualified on a program providing significant benefit. My suggestion is to lock while the getting is good and not worry where rates go from there. Waiting for a slight decrease in mortgage rate is too much of a risk to take when you are sitting on a current good to excellent refinance benefit scenario.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Mortgage Refinance Rates Continue Low and Steady Ride

After what has been a volatile year for mortgage refinance rates, mostly to the good side for refinancing homeowners, we have experienced somewhat of a steady rate state in the market over the past several weeks. After the dip in rates off the government announcement that it would buy US Treasuries and Fannie/Freddie mortgage-backed securities, the market bounced back up a bit into the current low and steady interest rate environment.

The biggest changes in the interim regarding mortgage refinance has really been the change to the Loan-to-Value (LTV) cap on cash-out refinances and the FHA minimum credit score change from 580 to 620. For the most part, 85 percent is the cap and most likely will not change upward until home prices act in kind. Expect the same for lower credit score qualifications. Lenders and HUD are just not willing to expose themselves to any undue risk until the housing market stabilizes.

FHA rate/term and cash-out refinance programs continue to offer excellent rates for those with high LTV’s and those with less than perfect credit down to a 620 mid FICO score. Conventional home loan rates for those with excellent credit and refinancing less than 80 percent of the appraised value of their home continue at historic low levels.

Recent housing reports suggest that we are still nowhere near stabilization for home prices. The best we can hope for is that inventories decrease over the next several months. This would be a nice way to alter the supply-demand while mortgage rates are still ultra-low.

Refinance shoppers keep telling me that they heard that refinance rates will hit a 4.0 percent “par” or “even” rate shortly, so they are waiting on the refinance fence. Be very careful if you are sitting on a current pre-qualified mortgage rate that is providing a significant benefit, and waiting for that coveted 4.0 percent par rate. The likelihood of that event occurring is not in your favor and with the 10-Year Treasury now breaching 3.0%, you run the risk of losing your “sure-thing” benefit, possibly for months, years, or forever. That could be a costly mistake, a tens-of-thousands dollar mistake.

You know what they say … “Get it while the Getting is Good”!

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

Cash-Out Refinance and Further Lender Tightening

Just last week, it was announced that the Cash-Out cap for FHA refinance loans would be reduced to 85 percent of home appraised value (LTV). Now, it appears that many conventional loan programs are following suit and reducing Cash-Out amounts as low as 80 percent for some lenders, even for those with excellent credit.

The lowered cash-out limits may be a direct reflection of continued downward pressure on home prices across the nation, but may also reflect credit-tightening measures by lenders battling in a cash-flow conscious industry.

Mortgage rates are still at excellent levels, particularly for those refinancing less than 80 percent of the value of their home with good to excellent credit.

The bigger picture for future low mortgage refinance rates and higher LTV limits will be heavily dependent upon two crucial factors.

The first is home value. Until the housing market stabilizes, banks and investors will continue to be strict with their funds, limit LTV limits and charge a higher-than-normal premium on interest rates for risk associated with home value.

The second is lender liquidity. An agreed upon method for valuing toxic assets held by banks (namely mortgage related investments) has yet to be found. Private investors (backed by the US government) are willing to buy these risky assets, but their price is much lower than what the banks are willing to sell them for. This story has been playing out for months, and a resolution does not appear in the cards any time soon. If the banks ultimately end up unloading these pesky liquidity killers, their balance sheets will allow a much more robust dive into mortgage lending.

It’s almost like the chicken and the egg… which one needs to occur first? It’s tough to say, but if the banks are able to unload their toxic assets, offered home purchase programs could become much less restrictive than current, drive competition among lenders, and bring an influx of willing and able buyers to the home-purchase closing table. Home supplies will decrease to meet an increasing demand and home prices could stabilize.

Let’s hope that an agreed-upon valuation method for toxic assets occurs soon. It would be a huge help for home values and mortgage financing opportunities, especially for those that require high LTV refinancing or home purchase mortgages.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box

FHA Temporarily Reduces Cash-Out Refinance LTV

Effective for April 1, 2009, the loan-to-value (LTV) of any cash-out refinance to be insured by FHA may not exceed 85 percent of the appraiser’s estimate of value. This restriction refinances is being instituted on a temporary basis while FHA further analyzes the housing and mortgage industry as well as its own portfolio to determine whether permanent measures should be taken.

It appears as though the US Department of Housing and Urban Development (HUD) is all too aware of the declining home values across the United States and is looking to limit their exposure for the cash-out refinance loan scenario. Hopefully, the previous 95 percent loan-to-value limit will be reinstated at some point down the road.

The current FHA 96.5 percent LTV limit on Rate/Term refinances (refinancing your existing mortgage only) has not been changed.

In a somewhat rosy on the surface report issued today, sales of existing home sales rose 5.1 percent in February, the largest increase in nearly six years. Unfortunately for property values, the increase is being attributed to falling home prices and mortgage interest rates.

There is a debate as to whether the housing market will begin to heat up into 2009. On one side, you have the folks that feel current low home prices and low mortgage rates will bring the offers in. The other side thinks that continued mounting job losses and declining incomes will keep people on the home-buying sidelines. New housing starts are still dismal, so it may be a stretch to call a housing market bottom this year.

On a bright note, the 10-year Treasury has declined a bit on the week and mortgage rates are still looking awesome.

If you are thinking about refinancing now, and plan to stay with your new mortgage for the long term (at least 5 years or more), now might be the time to act if you have a good credit score and are near that 80 percent loan-to-value ratio. The reason being that home values have been very volatile by area. Just one or two recently purchased foreclosure or rock-bottom priced homes in your area could bring the appraised value of your home down quickly, and possibly out of the “Under 80 LTV” sweet spot for refinance rates.

Many homeowners in the refinance market feel that rates will drop further and are holding off for even lower rates. This could prove costly if the value of their home drops in the meantime, and results in an “Over 80 LTV” refinance scenario.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box