Realty Times of February 11, 2010
Resolve to Take a Look at Refinancing by Broderick Perkins
If you haven't looked into refinancing your mortgage under federal programs, you could be missing an opportunity to save money, keep your home and give the economy a little juice.
Federal mortgage refinance programs have given more than 2 million homeowners a better shot at holding on and the economy a much needed shot in the arm.
What's more, the year began with fixed interest rates hovering slightly above 5 percent, but still near record lows, according to Erate.com.
First American CoreLogic's "How the U.S. Consumer Has Benefited from Mortgage Finance Programs in 2009," reveals a group of 2.2 million homeowners have saved an average $120 a month on their mortgage payment -- a 10.5 percent reduction from the previous mortgage payment.
The study says the refinance activity will result in $2.3 billion in mortgage payment savings for borrowers who refinanced in the first six months of 2009. Over the next five years, the total benefit to homeowners who refinanced in 2009 will grow to $11.5 billion.
The study analyzed residential mortgage refinances that occurred between October 2008 and June 2009 to test the impact of Federal Reserve efforts to lower interest rates and to measure effect of the Making Home Affordable's Home Affordable Refinance Program (HARP).
This summer, HARP gave a hand up to more homeowners suffering mortgages larger than the value of their home.
Borrowers current on payments with Fannie Mae or Freddie Mac guaranteed loans could be eligible for refinancing into new loans even if they owe as much as 125 percent of the home's current value. The previous HARP loan-to-value limit was 105 percent.
Also, if the existing mortgage were written without mortgage insurance, the new loan won't be burdened with the extra cost. Fannie Mae and Freddie Mac loans typically require mortgage insurance when the loan is more than 80 percent of the home's value.
Of course, if the current mortgage has mortgage insurance and the new loan is 80 percent or more of the home's value, mortgage insurance comes with the deal.
The new 125 percent limit also may not apply if a second mortgage combined with the first exceeds the limit. The new deal also doesn't allow homeowners to take cash out.
Another plus from the program: The higher loan-to-value ratios were first available only to qualified borrowers who applied through their existing servicer.
That's changed.
Since Oct. 1, 2009, homeowners got the option to shop around and refinance through any Fannie or Freddie lender.
In addition to lowering your monthly payment, a refinanced mortgage can move you to a fixed or adjustable rate, shorten the term of your home loan, or let you tap home equity -- with a lender's approval.
"The quantitative easing policies of the Federal Reserve and refinance activity made possible by the Home Affordable Refinance Program (HARP) have allowed more than 2 million consumers to reduce their monthly mortgage debt obligations and put more money in their pockets," said study author, Mark Fleming, Ph.D. and First American's chief economist.
"This permanent increase in monthly income is likely to, in part, be used to increase consumption and help to drive growth as the economy rebounds. The combination of lower payments and fixed-rate terms should also reduce the risk of future foreclosure," he added.
Perhaps, but some say the economy needs more than lower rates.
"Low fixed rates are only part of the solution to our economic problems," says Nancy Osborne, chief operating officer at Erate.com.
"Home buyers can enjoy record low rates to help them qualify for more home, and this in conjunction with the government's home-buyer tax credit work to stimulate the purchase market, yet the rising unemployment rate may make purchasing a home somewhat risky for all but the most securely employed," she added.
To check your eligibility for a refinance under the new provision, go to Making Home Affordable.
To compare rates, costs and other factors by state, go to Erate.com.
Copyright © 2010 Realty Times. All Rights Reserved.
Showing posts with label refinance. Show all posts
Showing posts with label refinance. Show all posts
Thursday, February 11, 2010
Monday, October 5, 2009
Preserving Homes and Communities Act
Realty Times of October 5, 2009
Washington Report: Preserving Homes and Communities Act by Kenneth R. Harney
Capitol Hill housing and mortgage lobbyists were buzzing last week about an aggressive new legislative proposal that could put tens of thousands of financially-stressed home owners into loan modifications, even if their lenders and loan servicers had to be dragged kicking and yelling to the negotiating table.
Under the new bill, which was sponsored by four Democratic senators active in housing issues, all lenders and servicers operating in the U.S. would be prohibited from foreclosing on home owners unless they had discussed reasonable modification options with the borrowers.
Lenders who didn't comply would be hit by stiff fines and other legal penalties.
Even more significant -- all lenders would be required to perform what the bill calls a “net present value” test for every seriously delinquent borrower -- that is, a financial analysis weighing the financial benefits of a modification of loan terms, compared with those of a foreclosure.
If the net present value of a modification exceeded that of a foreclosure, lenders would be required by federal law do so.
For borrowers unable to handle the payments offered under a modification plan, the bill would create a multi-billion national fund for states to make loans or grants to prevent foreclosures.
The bill, called the Preserving Homes and Communities Act, was authored by Rhode Island Senator Jack Reed, a senior banking committee member. It's co-sponsors include Illinois Senator Dick Durbin, Jeff Merkey of Oregon and Sheldon Whitehouse of Rhode Island.
The senators said they plan to push the legislation hard because they're frustrated by the slow pace of loan modifications in the face of record numbers of foreclosures this year.
“Voluntary efforts to keep families in their homes have failed,” said Durbin. “This bill will force lenders to modify qualified mortgages” rather than letting them move quickly to foreclosure, which destroys households and neighborhoods.
The mortgage payment assistance program created by the bill would provide money to state housing agencies to set up revolving funds to assist people who've lost income in the recession and now face the imminent loss of their house.
Federal and state funds could provide gap financing to get people past their problems -- or outright grants -- to help them avoid foreclosure.
The bill would also fund state and local programs that create “mandatory mediation” requirements. Lenders would have to allow mediation efforts between themselves and their borrowers before filing foreclosures against home owners.
Though certain to be opposed by banking and mortgage lending groups, the new proposal could get serious traction in the Senate, and is virtually certain to get strongly support in the heavily Democratic House.
Copyright © 2009 Realty Times. All Rights Reserved.
Washington Report: Preserving Homes and Communities Act by Kenneth R. Harney
Capitol Hill housing and mortgage lobbyists were buzzing last week about an aggressive new legislative proposal that could put tens of thousands of financially-stressed home owners into loan modifications, even if their lenders and loan servicers had to be dragged kicking and yelling to the negotiating table.
Under the new bill, which was sponsored by four Democratic senators active in housing issues, all lenders and servicers operating in the U.S. would be prohibited from foreclosing on home owners unless they had discussed reasonable modification options with the borrowers.
Lenders who didn't comply would be hit by stiff fines and other legal penalties.
Even more significant -- all lenders would be required to perform what the bill calls a “net present value” test for every seriously delinquent borrower -- that is, a financial analysis weighing the financial benefits of a modification of loan terms, compared with those of a foreclosure.
If the net present value of a modification exceeded that of a foreclosure, lenders would be required by federal law do so.
For borrowers unable to handle the payments offered under a modification plan, the bill would create a multi-billion national fund for states to make loans or grants to prevent foreclosures.
The bill, called the Preserving Homes and Communities Act, was authored by Rhode Island Senator Jack Reed, a senior banking committee member. It's co-sponsors include Illinois Senator Dick Durbin, Jeff Merkey of Oregon and Sheldon Whitehouse of Rhode Island.
The senators said they plan to push the legislation hard because they're frustrated by the slow pace of loan modifications in the face of record numbers of foreclosures this year.
“Voluntary efforts to keep families in their homes have failed,” said Durbin. “This bill will force lenders to modify qualified mortgages” rather than letting them move quickly to foreclosure, which destroys households and neighborhoods.
The mortgage payment assistance program created by the bill would provide money to state housing agencies to set up revolving funds to assist people who've lost income in the recession and now face the imminent loss of their house.
Federal and state funds could provide gap financing to get people past their problems -- or outright grants -- to help them avoid foreclosure.
The bill would also fund state and local programs that create “mandatory mediation” requirements. Lenders would have to allow mediation efforts between themselves and their borrowers before filing foreclosures against home owners.
Though certain to be opposed by banking and mortgage lending groups, the new proposal could get serious traction in the Senate, and is virtually certain to get strongly support in the heavily Democratic House.
Copyright © 2009 Realty Times. All Rights Reserved.
Monday, July 13, 2009
From Realty Times of July 13, 2009
Washington Report: Home Affordable Refinance Program by Kenneth R. Harney
The Obama administration's latest expansion of its "home affordable" refinance program, outlined just before the July 4 holiday, could be huge news for tens of thousands of owners whose houses are seriously "underwater," or where they're worth a lot less than the mortgage balance owed on them.
Under the new rules, even where borrowers have negative equities of as much as 25 percent, they may be able to refinance into better loan terms, provided their mortgage is owned or guaranteed by Fannie Mae or Freddie Mac.
Under the original rules for the program, the cutoff point was just five percent negative equity -- or a "loan to value" (LTV) ratio of 105 percent.
Though an estimated 80,000 owners already have been refinanced by Fannie and Freddie, HUD Secretary Shaun Donovan and Treasury Secretary Tim Geithner decided that the 105% LTV limit left too many borrowers out of reach.
In some parts of California, Nevada, Arizona and Florida, 40 to 50 percent of home owners are now stuck with negative equities, according to industry estimates. In Las Vegas, 67 percent of owners are underwater.
Zillow.com estimates that nationwide, 22 percent of all owners have negative equity in their properties - many of them by more than five percent.
The newly-expanded "home affordable" program opens the door not only to lower monthly payments for seriously underwater borrowers, but also to the possibility of shorter loan pay-off terms to reduce mortgage principal debts much faster.
Here's an example of how the expanded program could work:
Say your house is currently valued at $240,000, but your mortgage balance is $300,000.
You are underwater by 25 percent.
If your loan is owned or guaranteed by Fannie or Freddie, and you're not behind on your payments, you should be eligible for a "home affordable" refi.
Say your current payments are eighteen hundred sixty dollars a month. By refinancing into a new 30-year, $300,000 loan at five and a quarter percent, you could cut your principal and interest payment to about sixteen hundred sixty a month - a $200 saving.
Or you could shorten your loan term from 30 years to say, 15 years or 20 years at five and an eighth percent. If you could handle the slightly higher monthly payments, you'd accelerate your principal paydown speed, build equity and go from underwater to above water much faster, even without local market value appreciation.
To take advantage, contact your loan servicer to see if your mortgage is owned by Freddie or Fannie. Or you can check online at either fanniemae.com/loanlook, or freddiemac.com/mymortgage.
Copyright © 2009 Realty Times. All Rights Reserved.
Washington Report: Home Affordable Refinance Program by Kenneth R. Harney
The Obama administration's latest expansion of its "home affordable" refinance program, outlined just before the July 4 holiday, could be huge news for tens of thousands of owners whose houses are seriously "underwater," or where they're worth a lot less than the mortgage balance owed on them.
Under the new rules, even where borrowers have negative equities of as much as 25 percent, they may be able to refinance into better loan terms, provided their mortgage is owned or guaranteed by Fannie Mae or Freddie Mac.
Under the original rules for the program, the cutoff point was just five percent negative equity -- or a "loan to value" (LTV) ratio of 105 percent.
Though an estimated 80,000 owners already have been refinanced by Fannie and Freddie, HUD Secretary Shaun Donovan and Treasury Secretary Tim Geithner decided that the 105% LTV limit left too many borrowers out of reach.
In some parts of California, Nevada, Arizona and Florida, 40 to 50 percent of home owners are now stuck with negative equities, according to industry estimates. In Las Vegas, 67 percent of owners are underwater.
Zillow.com estimates that nationwide, 22 percent of all owners have negative equity in their properties - many of them by more than five percent.
The newly-expanded "home affordable" program opens the door not only to lower monthly payments for seriously underwater borrowers, but also to the possibility of shorter loan pay-off terms to reduce mortgage principal debts much faster.
Here's an example of how the expanded program could work:
Say your house is currently valued at $240,000, but your mortgage balance is $300,000.
You are underwater by 25 percent.
If your loan is owned or guaranteed by Fannie or Freddie, and you're not behind on your payments, you should be eligible for a "home affordable" refi.
Say your current payments are eighteen hundred sixty dollars a month. By refinancing into a new 30-year, $300,000 loan at five and a quarter percent, you could cut your principal and interest payment to about sixteen hundred sixty a month - a $200 saving.
Or you could shorten your loan term from 30 years to say, 15 years or 20 years at five and an eighth percent. If you could handle the slightly higher monthly payments, you'd accelerate your principal paydown speed, build equity and go from underwater to above water much faster, even without local market value appreciation.
To take advantage, contact your loan servicer to see if your mortgage is owned by Freddie or Fannie. Or you can check online at either fanniemae.com/loanlook, or freddiemac.com/mymortgage.
Copyright © 2009 Realty Times. All Rights Reserved.
Thursday, June 25, 2009
New Loan Modification, Short Sale Options
I can only hope none of you need this information, but if you do:
From Realty Times of June 25, 2009
New Loan Modification, Short Sale Options by Broderick Perkins
Now, mortgage modifications can include second mortgages -- not just first mortgages -- and cash incentives are sweetening short sale deals, thanks to new efforts by the Obama Administration.
The new efforts give some homeowners a second shot at a home-saving loan modification, especially if they were originally turned down -- or turned off -- because the second mortgage (piggy back, home equity loan or line of credit, etc.) impeded the process.
Other homeowners may now be able to take the short sale escape route from unaffordable mortgages that could otherwise wind up in foreclosure.
Second mortgage modifications
Loan modifications are designed to make the home loan more affordable, typically by reducing the interest rate, extending the term of the loan and, less often, by reducing the principal. They are not refinanced mortgages, which pay off the old mortgage with a new mortgage.
Under Making Home Affordable's new second-lien program, borrowers whose first mortgages are modified will automatically have payments reduced on their second mortgages as well, provided the first and second-mortgage lender participates in the program.
Twelve mortgage servicers currently do. Among them are large banks including, Bank of America, Wells Fargo, Countrywide, Citibank, Chase and others.
Eligible homeowners looking to modify their first mortgage must be an owner-occupant of the home; have an unpaid principal balance that is no more than $729,750; have a loan that was originated on or before January 1, 2009; have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31 percent of their gross monthly income; and have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses.
Under the new second mortgage program, in addition to lowering the payment, lenders can also opt to erase a borrower's second mortgage in exchange for a lump-sum payment from the government.
New short sale incentives
Short sale incentives were among recent refinements to the Obama administration's housing rescue programs.
In a short sale, the lender closes the mortgage in return for whatever sale price the homeowner can net. However, the difference is sometimes considered income for which the selling homeowner may be taxed. It's important to include a tax professional's advice in the deal.
Under the new short sale incentive, lenders can receive a $1,000 payment from the U.S. Treasury for allowing the owner to sell the house for less than the amount owed on the mortgage and for accepting the proceeds as full repayment, rather than treat it as a short sale.
Lenders can also receive $1,000 for accepting a deed-in-lieu transaction, in which the deed is simply transferred to the lender instead of going through a costly foreclosure.
Homeowners who agree to short sales or deed-in-lieu deals can receive up to $1,500 in closing costs. To help stop second mortgages from blocking the deal, the Treasury will pay second lien holders up to $1,000 to relinquish their claims in such transactions.
To learn more about these options visit MakingHomeAffordable.gov
Copyright © 2009 Realty Times. All Rights Reserved.
From Realty Times of June 25, 2009
New Loan Modification, Short Sale Options by Broderick Perkins
Now, mortgage modifications can include second mortgages -- not just first mortgages -- and cash incentives are sweetening short sale deals, thanks to new efforts by the Obama Administration.
The new efforts give some homeowners a second shot at a home-saving loan modification, especially if they were originally turned down -- or turned off -- because the second mortgage (piggy back, home equity loan or line of credit, etc.) impeded the process.
Other homeowners may now be able to take the short sale escape route from unaffordable mortgages that could otherwise wind up in foreclosure.
Second mortgage modifications
Loan modifications are designed to make the home loan more affordable, typically by reducing the interest rate, extending the term of the loan and, less often, by reducing the principal. They are not refinanced mortgages, which pay off the old mortgage with a new mortgage.
Under Making Home Affordable's new second-lien program, borrowers whose first mortgages are modified will automatically have payments reduced on their second mortgages as well, provided the first and second-mortgage lender participates in the program.
Twelve mortgage servicers currently do. Among them are large banks including, Bank of America, Wells Fargo, Countrywide, Citibank, Chase and others.
Eligible homeowners looking to modify their first mortgage must be an owner-occupant of the home; have an unpaid principal balance that is no more than $729,750; have a loan that was originated on or before January 1, 2009; have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31 percent of their gross monthly income; and have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses.
Under the new second mortgage program, in addition to lowering the payment, lenders can also opt to erase a borrower's second mortgage in exchange for a lump-sum payment from the government.
New short sale incentives
Short sale incentives were among recent refinements to the Obama administration's housing rescue programs.
In a short sale, the lender closes the mortgage in return for whatever sale price the homeowner can net. However, the difference is sometimes considered income for which the selling homeowner may be taxed. It's important to include a tax professional's advice in the deal.
Under the new short sale incentive, lenders can receive a $1,000 payment from the U.S. Treasury for allowing the owner to sell the house for less than the amount owed on the mortgage and for accepting the proceeds as full repayment, rather than treat it as a short sale.
Lenders can also receive $1,000 for accepting a deed-in-lieu transaction, in which the deed is simply transferred to the lender instead of going through a costly foreclosure.
Homeowners who agree to short sales or deed-in-lieu deals can receive up to $1,500 in closing costs. To help stop second mortgages from blocking the deal, the Treasury will pay second lien holders up to $1,000 to relinquish their claims in such transactions.
To learn more about these options visit MakingHomeAffordable.gov
Copyright © 2009 Realty Times. All Rights Reserved.
Friday, April 10, 2009
Mortgage Rates Remain under 5 Percent
From Realty Times of April 10, 2009
Application for Purchase and for Refinancing up Nicely as Mortgage Rates Remain under 5 Percent
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.87 percent with an average 0.7 point for the week ending April 9, 2009, up from last week when it averaged 4.78 percent. Last year at this time, the 30-year FRM averaged 5.88 percent.
The 15-year FRM this week averaged 4.54 percent with an average 0.7 point, up from last week when it averaged 4.52 percent. A year ago at this time, the 15-year FRM averaged 5.42 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.93 percent this week, with an average 0.7 point, up from last week when it averaged 4.92 percent. A year ago, the 5-year ARM averaged 5.56 percent. .
One-year Treasury-indexed ARMs averaged 4.83 percent this week with an average 0.5 point, up from last week when it averaged 4.75 percent. At this time last year, the 1-year ARM averaged 5.18 percent. The 1-year ARM has not been lower since the week ending September 29, 2005, when it averaged 4.68 percent.
"Mortgage rates rose slightly this week but still remained historically low," said Frank Nothaft, Freddie Mac vice president and chief economist. "Interest rates for 30-year fixed-rate mortgages have averaged below 5.0 percent for the last four weeks, which should keep homeowner affordability at record levels.
"Given these low rates, housing demand has strengthened. Conventional mortgage applications both for refinancing and for home purchases have increased over the past five consecutive weeks ending April 3. Since the end of February, applications for home purchases were up about 22 percent and nearly 129 percent for refinancing, according to the Mortgage Bankers Association."
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
Application for Purchase and for Refinancing up Nicely as Mortgage Rates Remain under 5 Percent
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.87 percent with an average 0.7 point for the week ending April 9, 2009, up from last week when it averaged 4.78 percent. Last year at this time, the 30-year FRM averaged 5.88 percent.
The 15-year FRM this week averaged 4.54 percent with an average 0.7 point, up from last week when it averaged 4.52 percent. A year ago at this time, the 15-year FRM averaged 5.42 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.93 percent this week, with an average 0.7 point, up from last week when it averaged 4.92 percent. A year ago, the 5-year ARM averaged 5.56 percent. .
One-year Treasury-indexed ARMs averaged 4.83 percent this week with an average 0.5 point, up from last week when it averaged 4.75 percent. At this time last year, the 1-year ARM averaged 5.18 percent. The 1-year ARM has not been lower since the week ending September 29, 2005, when it averaged 4.68 percent.
"Mortgage rates rose slightly this week but still remained historically low," said Frank Nothaft, Freddie Mac vice president and chief economist. "Interest rates for 30-year fixed-rate mortgages have averaged below 5.0 percent for the last four weeks, which should keep homeowner affordability at record levels.
"Given these low rates, housing demand has strengthened. Conventional mortgage applications both for refinancing and for home purchases have increased over the past five consecutive weeks ending April 3. Since the end of February, applications for home purchases were up about 22 percent and nearly 129 percent for refinancing, according to the Mortgage Bankers Association."
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
Friday, March 13, 2009
Rental & Second Home Refi's
From Realty Times of March 13, 2009
Investor Report: Refinancings by Kenneth R. Harney
Small-scale real estate investors got a pleasant surprise last week when Fannie Mae and Freddie Mac said they'd refinance potentially thousands of mortgages on rental and second homes as part of the Obama administration's massive housing relief effort.
The White House had announced last month that its refinancing effort would be for owner-occupied principal residences whose loans are either owned or have been guaranteed by Fannie or Freddie in mortgage-backed securities.
But when the two companies sent details of their upcoming programs to lenders last week, investor loans and mortgages on second homes WERE included among those eligible for refinancings.
A Freddie Mac spokesman, Brad German, explained that investors loans were included because refinancings can “help reduce renter evictions by putting landlords in a (more affordable) refi that improves their chance of success.”
That's excellent news for some investors, but it won't help out everybody.
Here's a quick overview of who's eligible and how to apply:
First, your investment property or second home loan must be owned or guaranteed by either Fannie or Freddie. Ask your loan servicer. Or you can go to websites set up by the companies to speed the process - Fannie Mae or FreddieMac.
If your mortgage is in some other institution's portfolio ... or in a private mortgage security, this program isn't for you.
Next, make a rough estimate of your current loan to value ratio on the property. If your mortgage balance does not exceed your property value by more than five percent, you're eligible.
Say you bought a rental duplex a few years back for $500,000 with a first mortgage of $400,000 at seven and a half percent that was acquired by Fannie Mae. You'd love to refinance that to today's much lower rates in the fives or sixes to increase your cash flow.
Because of local property value declines, say your duplex is now worth about the amount of your loan balance. That precludes you from refinancing from most sources, but under Fannie's special program, you'll be eligible … PROVIDED your loan balance does not exceed the property value by five percent.
There's another hoop to jump through: Your payment history on the mortgage needs to be just about flawless -- no thirty day late payments during the past 12 months -- or you won't get a refi.
Two additional, positive details to be aware of: Your credit score WON'T be a problem because Fannie and Freddie have agreed to waive their usual minimums, and you WON'T have to pay for new mortgage insurance.
Copyright © 2009 Realty Times. All Rights Reserved.
Investor Report: Refinancings by Kenneth R. Harney
Small-scale real estate investors got a pleasant surprise last week when Fannie Mae and Freddie Mac said they'd refinance potentially thousands of mortgages on rental and second homes as part of the Obama administration's massive housing relief effort.
The White House had announced last month that its refinancing effort would be for owner-occupied principal residences whose loans are either owned or have been guaranteed by Fannie or Freddie in mortgage-backed securities.
But when the two companies sent details of their upcoming programs to lenders last week, investor loans and mortgages on second homes WERE included among those eligible for refinancings.
A Freddie Mac spokesman, Brad German, explained that investors loans were included because refinancings can “help reduce renter evictions by putting landlords in a (more affordable) refi that improves their chance of success.”
That's excellent news for some investors, but it won't help out everybody.
Here's a quick overview of who's eligible and how to apply:
First, your investment property or second home loan must be owned or guaranteed by either Fannie or Freddie. Ask your loan servicer. Or you can go to websites set up by the companies to speed the process - Fannie Mae or FreddieMac.
If your mortgage is in some other institution's portfolio ... or in a private mortgage security, this program isn't for you.
Next, make a rough estimate of your current loan to value ratio on the property. If your mortgage balance does not exceed your property value by more than five percent, you're eligible.
Say you bought a rental duplex a few years back for $500,000 with a first mortgage of $400,000 at seven and a half percent that was acquired by Fannie Mae. You'd love to refinance that to today's much lower rates in the fives or sixes to increase your cash flow.
Because of local property value declines, say your duplex is now worth about the amount of your loan balance. That precludes you from refinancing from most sources, but under Fannie's special program, you'll be eligible … PROVIDED your loan balance does not exceed the property value by five percent.
There's another hoop to jump through: Your payment history on the mortgage needs to be just about flawless -- no thirty day late payments during the past 12 months -- or you won't get a refi.
Two additional, positive details to be aware of: Your credit score WON'T be a problem because Fannie and Freddie have agreed to waive their usual minimums, and you WON'T have to pay for new mortgage insurance.
Copyright © 2009 Realty Times. All Rights Reserved.
Subscribe to:
Posts (Atom)
