QE 3 Are you ready?

 

QE3 Coming Next Week?

Mortgage pricing worsened Tuesday as investors prepped for this week's European Central Bank meeting. The ECB meets Thursday, adjourning at 7:00 AM ET. In other words, by the time the U.S. mortgage market opens tomorrow morning, rates will already be changed.
Wall Street is also jockeying ahead of the Federal Open Market Committee's 2-day meeting scheduled for September 12-13, 2012. There are growing expectations for the Federal Reserve to introduce a new round of monetary stimulus, likely in the form of quantitative easing. This would be the Fed's third round of quantitative easing since November 2008, which is why the not-yet-launched program is dubbed QE3.
QE3, if launched, is expected lower mortgage rates in the near-term.

Home Prices Rise 3.8%; Construction Spending Falls

Other news affecting mortgage rates Tuesday included a weak ISM report and a drop in construction spending.
The Institute for Supply Management indicated that its manufacturing index dropped to 49.6. Readings under 50 indicate that more firms are contracting than growing, a sign of economic slowdown. Construction spending fell 0.9 percent, in part, because of a pick-up in home sales nationwide. Homeowners do less building when they're buying.
As a testament to the housing market's strength, CoreLogic reported home prices up 3.8% in the 12-month period ending in July.
On a month-to-month basis, home prices rose 1.3 percent and August is forecasted to show a further increase of six-tenths of one percent. This would push the annual home price increase to 4.6 percent -- a steady, consistent figure.

Mortgage Rates Ready To Move

Wednesday, with little new data set for release, mortgage rates will move with momentum. Rhetoric from the ECB ahead of Thursday meeting will influence whether mortgage rates rise or fall, but trading should be relatively calm. Markets are also bracing for Friday's U.S. jobs report. That, too, could swing mortgage rates today.

Can a FHA Streamline help you?

What Is An FHA Streamline Refinance?

The FHA Streamline Refinance is a special mortgage product, reserved for homeowners with existing FHA mortgages. Homeowners with conventional mortgages via Fannie Mae or Freddie can't use it. FHA Streamline Refinances are the fastest, simplest way for FHA-insured homeowners to refinance their respective mortgages.
The FHA Streamline Refinance program's defining characteristic is that it does not require a home appraisal. Instead, the FHA will allow you to use your original purchase price as your home's current value, regardless of what your home is actually worth today.
In this way, with its FHA Streamline Refinance program, the FHA does not care if you are underwater on your mortgage. In fact, the program encourages underwater mortgages. Even if you owe twice what your home is now worth, the FHA will refinance your home without added cost or penalty.
The FHA allows for unlimited loan-to-value with its Streamline Refi program -- a huge help to FHA homeowners in places like Florida, California, Arizona and Georgia.
Except for this "no appraisal" benefit, the FHA Streamline Refinance is very much like other loan products. It's available as a fixed rate or adjustable mortgage; it comes with 15- or 30-year terms; and there's no prepayment penalty to worry about.
Another big plus is that FHA mortgage rates are as low with the Streamline Refinance program as with "regular" FHA loans.

FHA Streamline : No Verification Of Job, Income, Credit

Another big plus is that the FHA Streamline Refinance is fairly easy for which to qualify.
In a sweeping guideline update, in April 2011, the FHA abolished verification for practically everything on an FHA Streamline Refinance mortgage application. Now, as written in the FHA's official mortgage guidelines, the mortgage approval process for an FHA Streamline Refinance says :

1. Employment verification is not required with an FHA Streamline Refinance
2. Income verification is not required with an FHA Streamline Refinance
3. Credit score verification is not required with an FHA Streamline Refinance

And, as mentioned earlier, there's no need for a home appraisal, either.
Put it all together and it means that you can be (1) out-of-work, (2) without income, (3) carry a terrible credit rating and (4) have no home equity -- and yet, you will still be approved for the FHA Streamline Refinance program.
That's not as crazy as it sounds, by the way.
To understand why the FHA Streamline Refinance is a smart program for the FHA, we have to remember that the FHA's chief role is to insure mortgages -- not "make" them.
Therefore, it's in the FHA's best interest to help as many people as possible qualify for today's low mortgage rates. Lower mortgage rates means lower monthly payments which, in theory, leads to fewer loan defaults.
This is good for homeowners that want lower mortgage rates, and for the FHA, but mostly for the FHA.

Are You FHA Streamline Refinance Eligible?

Although the FHA Streamline Refinance eschews the "traditional" mortgage verifications of income and credit score, as examples, the program does enforce minimum standards for applicants. The official FHA Streamline Refinance guidelines are below.

Perfect, 12-Month Payment History Is Required

The FHA's main goal is to reduce its overall loan pool risk. Therefore, it's number one qualification standard is that homeowners using the Streamline Refinance program must have a perfect payment history stretching back 12 months. 30-day, 60-day, and 90-day lates are not allowed. Furthermore, loans must be current at the time of closing.

210-Day "Waiting Period" Between Refinances

The FHA requires that borrowers make 6 mortgage payments on their current FHA-insured loan, and that 210 days pass from the most recent closing date, in order to be eligible for a Streamline Refinance.

Employment And Income Are Not Verified

The FHA does not require verification of a borrower's employment or annual income as part of the FHA Streamline process. There is no Verification of Employment, nor are there paystubs, W-2s or tax returns required for approval. You can be unemployed and get approved for a FHA Streamline Refinance so long as you still meet the other program requirements.

Credit Scores Are Not Verified

The FHA does not verify credit scores as part of the FHA Streamline Refinance program. Instead, it uses payment history as a gauge for future loan performance. This means that FICOs under 640, under 620, under 580, and under 500 are eligible for Streamline Refis.

The Refinance Must Have "Purpose"

Streamline Refinance applicants must demonstrate that there's a Net Tangible Benefit in the refinance; a legitimate reason for refinancing. Loosely, Net Tangible Benefit is defined as reducing the (principal + interest + mortgage insurance) component of the mortgage payment by 5 percent or more. Another allowable Net Tangible Benefit is to refinance from an adjusting ARM into a fixed rate loan. Taking "cash out" to pay bills is not an allowable Net Tangible Benefit.

Loan Balances May Not Increase To Cover Loan Costs

The FHA prohibits increasing a Streamline Refinance's loan balance to cover associated loan charges. The new loan balance is limited by the math formula of (Current Principal Balance + Upfront Mortgage Insurance Premium). All other costs -- origination charges, title charges, escrow population -- must be either (1) Paid by the borrower as cash at closing, or (2) Credited by the loan officer in full. The latter is called a "zero-cost FHA Streamline".

Appraisals Not Required

The FHA isn't concerned about home value -- it's insuring your loan regardless. Therefore, the FHA does not require appraisals for its Streamline Refinance program. Instead, it uses the original purchase price of your home, or the most recent appraised value, as its valuation point. Homes that are underwater are still FHA Streamline-eligible.

FHA Streamline Refinance Mortgage Insurance Requirements

The FHA Streamline Refinance is an FHA-insured mortgage, and FHA borrowers are required to make two types of mortgage insurance payments -- an upfront mortgage insurance payment paid at closing, plus an annual one split into 12 installments, paid with your mortgage payment each month.
With respect to mortgage insurance premiums, as of June 11, 2012, homeowners using the FHA Streamline Refinance program are split into two classes :

1. Homeowners whose new loan replaces an FHA-backed mortgage endorsed before June 1, 2009
2. Homeowners whose new loan replaces an FHA-backed mortgage endorsed on/after June 1, 2009.

Beginning June 11, 2012, homeowners in the first class -- those with"old" FHA mortgages to refinance -- will pay markedly lower mortgage insurance than homeowners in the second class of borrowers.

FHA Streamline Refinance MIP Rates (For Loans Endorsed Before June 1, 2009)

If your existing FHA mortgage was endorsed prior to June 1, 2009, your mortgage insurance premiums have been "grandfathered". You can refinance to the FHA Streamline Refinance program and pay reduced rates for both for upfront MIP and annual mortgage insurance premiums.

Upfront MIP

For an FHA Streamline Refinance that replaces a loan endorsed prior to June 1, 2009, the new FHA mortgage's upfront mortgage insurance is equal to 0.01 percent of the loan size, or 1 basis point.
For example, if your new FHA Streamline Refinance is for $100,000 mortgage, the FHA will assess a $10 upfront mortgage insurance premium (MIP) to be paid by you at closing. The FHA automatically adds the $10 payment to your new loan balance.

Annual MIP

Annual MIP is similarly cheap. For an FHA Streamline Refinance that replaces a FHA loan endorsed prior to June 1, 2009, the annual MIP is 0.55% annually, or 55 basis points.
The complete annual MIP schedule is as follows :

• 15-year loan terms with loan-to-value over 90% : 0.55 percent annual MIP
• 15-year loan terms with loan-t0-value under 90% : 0.55 percent annual MIP
• 30-year loan terms with loan-to-value over 95% : 0.55 percent annual MIP
• 30-year loan terms with loan-to-value under 95% : 0.55 percent annual MIP

15-year fixed rate mortgages with LTVs of 78% or less pay no annual MIP.
For an FHA Streamline Refinance that replaces a FHA loan endorsed prior to June 1, 2009 and for which the mortgage is a jumbo FHA mortgage in excess of $625,500, there is no additional mortgage insurance premium.

FHA Streamline MIP For Loans Endorsed On/After June 1, 2009

If your existing FHA mortgage was endorsed on, or after, June 1, 2009, your new FHA mortgage insurance premiums are the same as for all other FHA mortgage applicants.

Upfront MIP

For an FHA Streamline Refinance that replaces a loan endorsed on, or after, June 1, 2009, the new FHA mortgage's upfront mortgage insurance is equal to 1.75 percent of the loan size, or 175 basis points.
For example, if your new FHA Streamline Refinance is for $100,000 mortgage, the FHA will assess a $1,750 upfront mortgage insurance premium (MIP) to be paid by you at closing. The FHA automatically rolls the $1,750 payment into your new loan balance.
Not all FHA homeowners will pay this full amount, however.
One great thing about the FHA Streamline Refinance program is that the FHA offers refund on previously-paid upfront MIP so long as you're still within the first 3 years of your mortgage.
As an example, refinancing after 11 months grants a 60% refund, but waiting just one more month lowers that refund down to 58%. This is why is rarely a good idea to "wait to refinance" with the FHA. With the FHA Streamline Refinance, the sooner you refinance, the bigger your MIP refund, and the lower your final loan size. This preserves home equity.
You can review your own FHA mortgage insurance refund chart at top.

Annual MIP

For an FHA Streamline Refinance that replaces a FHA loan endorsed on, or after, June 1, 2009, the annual MIP varies based on loan type and loan-to-value.
The annual MIP schedule, for loans with case numbers assigned on, of after, June 1, 2009 :

• 15-year loan terms with loan-to-value over 90% : 0.60 percent annual MIP
• 15-year loan terms with loan-t0-value under 90% : 0.35 percent annual MIP
• 30-year loan terms with loan-to-value over 95% : 1.25 percent annual MIP
• 30-year loan terms with loan-to-value under 95% : 1.20 percent annual MIP

15-year fixed rate mortgages with LTVs of 78% or less pay no annual MIP. Mortgages made for $625,500 or more are subject to an additional 0.25 percent annual mortgage insurance fee.
A Los Angeles, California homeowner, therefore, using the FHA's full $729,750 local loan limit for a low-downpayment, 30-year fixed rate mortgage will pay annual mortgage insurance premium of 1.50% to the FHA, or $912 per month.
Note that mortgage insurance payments are included in the FHA's Net Tangible Benefit requirement. You must lower your monthly payment by at 5 percent to qualify for the FHA Streamline Refinance.

Apply For Your FHA Streamline Refinance Here

The FHA Streamline Refinance is among the easiest and best-valued mortgage products available.
If you have an existing FHA mortgage, get yourself a FHA Streamline Refinance rate quote. FHA mortgage rates are low and my office underwrites and funds FHA loan in-house. This means we can close your mortgage faster, entitling you to a bigger FHA refund check on your Streamline Refinance.

Have you heard about Rebuilding American Homeownership?

For underwater homeowners, there may be new refinance help on the horizon. A new refinance plan was floated in Congress this week. The program would toss a lifeline to underwater homeowners who fall outside HARP and FHA Streamline Refinance guidelines, for example, but whom are otherwise "model homeowners".

Proposed : "Rebuilding American Homeownership"

There are several ways by which today's underwater homeowners can access the market's low mortgage rates. Unfortunately, each requires that the homeowner's mortgage is backed currently by a government agency.

• For Fannie Mae- and Freddie Mac-backed loans, there's the HARP Refinance
• For FHA-insured loans, there's the FHA Streamline Refinance
• For VA-insured loans, there's the VA IRRRL program
• For USDA-insured loans, there's the USDA Streamline Refinance

There are millions of U.S. homeowners, though, from Silicon Valley, California to Manhattan, New York, whose mortgages are not backed by one of the above four agencies. Rather, these homeowners' mortgages are backed by private lenders and smaller banks.
Under the proposed refinance program, all homeowners who are current on their existing mortgage and who meet "ordinary underwriting criteria" would be eligible for new, prescribed mortgage rates -- either for a 15-year fixed rate mortgage or a 30-year fixed rate mortgage.
The HARP-like program is titled "Rebuilding American Homeownership".

RAH : Self-Funding And "Probably Profitable"

To fund its mortgages, the Rebuilding American Homeownership program would rely on a Refinance Trust, backed by the U.S. government and funded via bond sales. The prescribed mortgage rates of the RAH program would be sufficiently low to reward refinancing borrowers, and sufficiently high to mitigate default risk.
The RAH proposal calls for a 2% spread between bond yields and consumer mortgage rates.This spread would render the program profitable under all but the most stressed of financial scenarios.
The RAH trust is expected to pay for itself and turn a profit without have to use U.S. taxpayer dollars.

RAH Endorsed By Economists, NAR

The proposed Rebuilding American Homeownership program has been endorsed by the National Association of Realtors and several well-known economists. The appeal is obvious, too -- RAH would bestow mortgage payment relief upon low-risk homeowners without using a dime of taxpayer money.
It's unclear whether the Rebuilding American Homeownership plan will come to fruition -- especially with HARP 3 getting traction in Congress and with the White House. However, should RAH pass, it would give millions of underwater homeowners access to lower mortgage rates and lower monthly payments.

HARP 2 Changes Increase Program Market Share

After 2 years and 2 months, the Home Affordable Refinance Program (HARP) is finally making an impact on U.S. homeowners. The FHFA reports that 1 in 5 refinances made through Fannie Mae and Freddie Mac between January - May 2012 used the HARP refinance program.
At 20% of all refinances, this is the largest market share for HARP since the program's March 2009 launch.

HARP 2 Changes Increase Program Market Share

HARP was first launched in March 2009. Its goal was to help 7 million U.S. homeowners get access to the day's low mortgage rates.
HARP's main feature was that it waived mortgage insurance requirements for refinancing homeowners whose current mortgages required no such thing -- even if their home's new valuation pushed them over the 80% limit. With HARP, you could refinance into an LTV over 80% and not pay mortgage insurance.
It's easy to see the program's appeal.
However, the government placed an LTV limit of 125% on all HARP borrowers and, after 2 years, the HARP refinance program was falling well short of its 7 million household target. That's when the government made changes to the "underwater mortgage" program, allowing for unlimited loan-to-value among other changes.
Not surprisingly, beginning with the launch of HARP 2, HARP mortgage applications soared.

FHFA Reviews HARP 2 Statistics

HARP 2 launched in late-2011. Refinance activity has been strong in the months since. Recently, the FHFA released data on this year's first batch of HARP refinances. A few key trends emerge :

• Freddie Mac handled 45% of HARP refinances but just 35% of all refinances overall, January-May 2012
• Nevada, Michigan and Arizona have the highest ratio of HARP refinances to all refinances, January-May 2012
• HARP refinances are 30-year fixed rate mortgages twice as often as they're for 15-year or 20-year terms

Most importantly, though, the removal of the 125% loan-to-value limit doesn't appear to be changing the distribution of closed HARP mortgages.
In May, mortgages with LTV in excess of 125% accounted for just 4.4% of the overall HARP total. The majority of loans are still written in the 80-105% LTV range. This data suggests that, despite looser lending guidelines with the new HARP 2.0 program, mortgage lenders are choosing to keep high-risk loans off their books.
If you've been turned down for HARP because of high LTV, it's likely "lender choice" as opposed to HARP guidelines. Consider applying again with a different mortgage lender. You may get different results.

Now FHA 203k Loans For Real Estate Investors?

FHA 203k Loans For Real Estate Investors

16 years ago, the FHA changed its "construction loan" program, making it available for owner-occupied properties only. Real estate investors and owners of vacation homes were locked out.
Today, there's talk of restoring 203k access. HUD says it intends to re-open 203k loans to investors sometime soon, although no specific date has been announced.
The 203k : An FHA Construction Loan

The FHA 203k mortgage is similar to a bank construction loan. Homeowners submit construction plans to the lender and the lender makes a loan based on the expected value of the home post-repair.
The FHA 203k has minimum eligibility standards :

oHomes must have fewer than 4 units and must be at least 12 months old
oPlanned repairs must meet local zoning and building codes
oIf new living units are planned, they must be attached to the original structure
In addition, standard FHA underwriting requirements apply including minimum FICO scores for applicants and the meeting of minimum debt-to-income ratios.
FHA 203k loans can be used for foreclosures and fixer-uppers at the time of purchase, and may also be used for homes which you already own. 203k loans can be a less expensive way to finance home construction.

203k For Investors Can Help Neighborhoods, Communities

When HUD opens the FHA 203k mortgage program to real estate investors, it will help buyers who choose to renovate and resell. Currently, these buyers pay cash for homes and finance construction via personal funds. With the ability to leverage a bank's money, investors will likely buy more foreclosures and renovate more homes.

Access to the FHA 203k program helps investors, but it also helps communities hard-hit by foreclosures and the economy. Real estate investors have the experience and ability to buy and repair homes at a rapid pace as compared to individual buyers.
HUD 203(k): No Official Decison Yet

The HUD 203k mortgage program facilitates the purchase, repair and occupancy of vacant homes. And, although there's no timetable for making 203k available to investors, the real estate community eagerly awaits the change.

If you're a home buyer or home owner looking to use the 203k for construction, get started with a rate quote. As mortgage rates have dropped overall, 203k mortgage rates have, too. It's an inexpensive time to finance a project.

Housing heating up?

 

Multiple-Offer Situations : More Common Nationwide

The housing market is in recovery. This much is clear. Little-by-little, sector-by-sector, data proves what today's home buyers are learning the hard way -- there's competition for right-priced homes and competition is driving home prices higher.
Multiple-offer situations aren't just relegated to San Francisco, California; or, Brooklyn, New York, either. Now, they're extending into markets including Dallas, Texas; Chicago, Illinois; and, Miami, Florida.
Home values won't recover to pre-crash levels soon, but there's a lot about which to get excited in housing.

Stimulus Plans Unlocked Housing, Led To Gains

If you want hear about the housing recovery, talk to an active home buyer in today's market. You'll hear that low mortgage rates make homeownership attractive -- if only there were more homes to buy. Supplies remain limited and few new homes are coming online.
However, if you want to see the data behind what buyers tell you, consider :

• Existing home sales are up nearly 10% over one year ago.
• Home builder report more buyer foot traffic than at any time in the past 5 years.
• New home construction of 1-unit homes is higher in 4 straight months and higher by 25 percent since June of last year.
• The Case-Shiller Index reports higher home sale prices in half of its 20 tracked cities as compared to last year.
• New homes are selling at the fastest pace since April 2010, the last year of that year's federal home buyer tax credit.

There's no secret about why housing has recovered. A series of stimulus programs late last decade put the recovery into motion and now, today, low mortgage rates are pushing home affordability to record levels nationwide.
Homeownership is affordable to more U.S. households than at any time in history.

Get A Rate Quote For Mortgage

If you're shopping for a mortgage or just curious about what today's low mortgage rates could do for your household budget, be sure to ask for a rate quote. It's free and there's no obligation whatsoever.
With mortgage rates scraping 3.500%, you're going to like what you see.

FHA help for first time buyers?

FHA Mortgage Insurance To Fall For First-Time Buyers? Earlier this year, the FHA raised upfront mortgage insurance premiums to 1.75% of the amount borrowed, due at closing; and raised annual mortgage insurance premiums to as high as 1.25% per year. For homeowners in high-cost areas such as Orange County, California with mortgages in excess of $625,500, the FHA tacks on another 0.25% in MIP per year. What was once considered an "affordability product" has suddenly become quite expensive -- especially for first-time home buyers. This is one reason why Representative Karen Bass, D-California has introduced a bill (H.R. 5884), which is sponsored by Representative Robert J. Dold, R-Illinois and Luis V. Gutierrez, D-Illinois, and which is meant to help make FHA mortgages more affordable for first-time home buyers. The bill is listed in Open Congress as : H.R.5884 - To establish a 1-year pilot program to reduce up-front premiums on FHA mortgage insurance for first-time homebuyers who complete a homeownership counseling program and thereby help to reduce default rates on residential mortgages. To qualify, first-time buyers would only have to complete a home ownership counseling program. The reward would be lower FHA mortgage insurance rates. FHA Mortgage : 3.5% Downpayment Allowed The FHA has gained market share this decade, in part, because it offers one of the few, true low-downpayment mortgage programs. The FHA only requires a 3.5% downpayment at the time of closing, so long as the amount borrowed does not exceed local loan limits. It's an advantage that the FHA has over comparable loan programs from Fannie Mae or Freddie Mac which are typically 5% down, at minimum, and often 10% or more. One reason that the FHA can afford to take "risks" on low downpayments is because it's a self-funded organization. FHA-backed borrowers pay mortgage insurance to the FHA, and the FHA uses those premiums to stay in business. Unfortunately, as the number of FHA loans in default has climbed, so have FHA mortgage insurance rates. Today's rates can be 3 times as high as what they were in 2008. Back then, a homeowner in Loudoun County, Virginia may have paid 0.5% annually to the FHA for mortgage insurance -- $500 per $100,000 borrowed. Today, that same homeowner's annual MIP could be as high as 1.50%. Priming The FHA Pump For Housing H.R. 5884 is not the first FHA-related bill to come through Congress. There's also talk of a HARP 3 program, and the FHA is believed to play a big role in its rollout. And, because the FHA can recapitalize itself via mortgage insurance, it's likely that the FHA's name will come up time and again as housing gets back on its feet. For first-time buyers, though, the FHA may offer a chance a mortgage "on the cheap". As everyone else's mortgage insurance rates go up, for first-time buyers, FHA mortgage insurance rates could go down.