Posts Tagged ‘Home Economic Recovery Act’

A New FHA Refinance Program for Struggling Home Owners

April 1st, 2010

Last Friday, HUD announced a new program designed to help home owners who have seen a drop in their home’s value.  We do not have all the details yet, but here is a quick summary of what was announced:

1.  Existing lender must be willing to write down/reduce the loan’s principle balance by at least 10%.

2.  The new maximum loan to value (LTV) can be no more than 97.75% of your home’s value.

3.  If you have a second mortgage, your new combined loan to value (CLTV) can be no more than 115% of your home’s value.

4.  The new first mortgage will have standard FHA mortgage insurance.

5. Maximum housing expense ratio of 31% (No more than 31% of your gross income can be going toward your housing payments.

6. Maximum total expense ratio of 50% (No more than 50% of your gross income can be going toward your housing payments, credit cards, and other loans on your credit report.

7.  You MUST be current on your mortgage payments.

8.  Minimum Credit Score of 500.

9.  This will show as a Write Down or something similar on your credit report. (This means it has some impact but probably less than a foreclosure.)

10.  You cannot already have an existing FHA loan.

Now, the thing to keep in mind with this program is that even though HUD/FHA set these new rules, each lender has their own overlays that adjust the program’s qualifying guidelines.  But if this program rolls out the way it should, the new program should help thousands of home owners who want to keep from losing their home.

If you are interested in this new program, please feel free to send us an email at service@TheKunselmanTeam.com and we will keep you informed as this program is released.  Also, keep in mind the other Making Home Affordable Programs that The Kunselman Team offers which can help many homeowners who lost equity in their home, but have managed to keep making their payments on time.

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A Working Government Program for Home Owners

March 3rd, 2010

Over the last couple of years, the government has made many attempts at trying to help home owners keep there homes.  Many of these attempts have been disappointments at best or all out failures at their worst.  There are a couple of programs though that are working to help home owners lower their mortgage payments, and get them into good, stable 30 year fixed mortgages.  The two programs I speak of are the DU Refinance + and the Freddie Mac Open Access and they are part of the Making Home Affordable Program.  These two programs are designed for home owners who have seen a decline in their properties value, but have still kept making their payment on time.

Here is a brief synopsis of how the program works and what is required to qualify for it.  These loan programs will allow a home owner to refinance their 1st mortgage into a 30 year fixed mortgage without mortgage insurance, even if their new first mortgage is more than 80% of their homes value (up to 125% of the homes value).  You have to qualify the same way you would with a regular refinance and the rates will (in many cases) be similar to what you would get if you were refinancing with an 80% loan to value (LTV).  There are two main requirements for this program though.  First, your loan must be serviced by Fannie Mae or Freddie Mac.  To check this go to the website http://www.makinghomeaffordable.gov/loan_lookup.html and follow the links.  Remember too that just because you are not making your monthly payment to Fannie or Freddie, doesn’t mean they aren’t the servicer.  Either check the website above or give the Kunselman Team a call and we can look it up for you.  The second qualifying factor for this program is that your original first mortgage had to be for less than 80% of the homes value at the time you got the mortgage.  So if you have had or currently have mortgage insurance on your mortgage, you don’t qualify for this program.  That being said, there may still be options for you as long as you have not missed any of your payments.  You are allowed to have a 2nd mortgage on the property (this is perfect for all of you who got an 80/20 when you bought or refinance) as long as the existing 2nd mortgage company is willing to re-subordinate their mortgage.  You cannot get cash out on this refinance but you can save a lot of money by lowering your interest rate.

The Kunselman Team has helped many home owners with these amazing programs, and have lowered some peoples interest rates by over 1.50%.  The Making Home Affordable Programs are shining diamonds in the trash pile of the many failed government programs out there and while it won’t work for everyone, it may just work for you.  So give The Kunselman Team a call to see if you qualify and take advantage of the low interest rates before they go up.

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What Are Rates Going to Do This Year?

January 21st, 2010

Interest rates for mortgages over the last 6 months have been amazing.  Most borrowers have been able to get rates in the low 5% without paying any points or high 4% if they wanted to pay some points.  There is a lot of speculation in the market right now about what is going to happen with rates.  There are really only two arguments, rates are going to go up or rates are going to stay the same.  Here is the basis of both of these arguments.

Rates are going to go up:
Rates have been kept artificially low over the last year.  The government has been investing billions if not trillions of dollars into the purchase of mortgage backed securities.  The government has only committed to buying mortgage backed securities through the end of the first quarter of 2010.  This news raised a lot of chaos in the market toward the end of last year.  Rates stepped up about a half of a percent on this news.  The government cannot continue to keep purchasing more and more of these securities.  If they do, the value of the dollar will continue to go down as well as the risk of another housing bubble.

Rates are going to stay the same:
The government has spent the better part of two years attempting to stabilize the housing market.  The most successful aspect of this effort has been the purchasing of mortgage backed securities to keep interest rates low.  If the government stops buying these mortgage backed securities, who will be there to buy them?  The market has not shown a strong appetite for these securities since they first crashed a few years ago.  The only reason that banks are still writing new mortgages is because there is someone buying them on the secondary market.  If the secondary markets disappears, the banks will all but shut down the market.  The government showed the big banks that they would not let them fail and the banks know they hold all the cards.  Until a new investor shows up in the secondary market, that wants to buy mortgage backed securities, the US Government is going to be obligated to keep buying them.  Failure to do so would result in another crash of the housing market.

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Fewer Rules, More Common Sense 2

September 24th, 2009

If you read last month’s news letter, you might notice that the “Advice from the Mortgage Masters” article is very similar this month.  This was done intentionally because the message still rings true with this months mortgage update.  HVCC and HERA are both examples of good intentions gone bad.

One of the biggest problems facing our country right now is the flood of new laws being put into place.  Because of the state of the economy and incorrect opinions about what got us to this place, many politicians are creating laws based more on what they think will get them more votes instead of looking taking the time to really understand the problem so they can properly fix it.

Here is the inherent problem with trying to solve the problems in our country with more rules.  Every time you create a new law, you create more loopholes for people to get around the laws.  All the laws really do is increase the cost of doing business for those professionals who continue to operate in a legal and ethical way already.  Someone who is currently breaking the law, will just end up breaking the new laws.

What we really need in this country is more common sense.  Instead of creating new laws, why don’t we just give more power to those who have authority to enforce the laws we already have.  Before the HERA was put into place, brokers and lenders were required to give a good estimate about fees and costs associated with a new mortgage.  The real problem was that if a consumer felt that they had been lied to or tricked, they didn’t have an effective way to voice their complaint.

So be patient.  If you are interested in refinancing your home, understand that your mortgage professional would like to get you closed as soon as possible, but things are just taking longer than they used to.

As always, if you would like to see what it feels like to work with a mortgage broker that can bring a little sanity to an insane world, give The Kunselman Team a call.

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On Your Marks, Get Set…Wait!

September 24th, 2009

Anybody that has tried to get anything done with their mortgage recently understands that things have been moving a little slow.  Well good news, the politicians in all their infinite wisdom decided that you the consumer need EVEN MORE TIME to make a proper decision about your mortgage.  The fact that on average a mortgage takes 3-4 weeks to complete and that after you sign documents on a refinance; you still have an additional 3 days to decide whether or not you want the new loan.

The Home Economic Recovery Act (See the name even sounds good) or HERA as it is also known, went into effect on July 30, 2009.  On average we are expecting that HERA will add 5 to 10 days for your new mortgage to close.  What that really means is that now instead of being able to lock rates for 30 days, many loans will have to be locked now for 45 days.  The longer the lock, the more it costs.

Now I understand what the intention behind this new law was to try and protect consumers but they are going about it the wrong way.  There are enough laws on the book.  What would be more helpful to consumers would be to enforce the existing laws.  All the laws in the world mean nothing if they are not enforced.

Something that would make more sense is giving the consumer a way to file a complaint if they feel they were tricked or lied to.  If the Department of Real Estate received enough complaints, then they could investigate a particular broker’s business, instead of changing the rules to punish everyone.  Because as I have stated before, those people who obey the existing laws will obey the new laws and those who don’t obey the existing laws, will not obey the new ones either.  They will just figure out a way around them.

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Fewer Rules, More Common Sense

September 24th, 2009

The HVCC as mentioned above is just another example of good intentions gone bad.  One of the biggest problems facing our country right now is the flood of new laws being put into place.  Because of the state of the economy and incorrect opinions about what got us to this place, many politicians are creating laws based more on what they think will get them more votes instead of looking taking the time to really understand the problem so they can properly fix it.

Here is the inherent problem with trying to solve the problems in our country with more rules.  Every time you create a new law, you create more loopholes for people to get around the laws.  All the laws really do is increase the cost of doing business for those professionals who continue to operate in a legal and ethical way already.  Someone who is currently breaking the law, will just end up breaking the new laws.

What we really need in this country is more common sense.  Instead of creating new laws, why don’t we just give more power to those who have authority to enforce the laws we already have.  Before the HVCC was put into place, it was against the law for any lender or mortgage broker to influence the value of an appraisal.  The real problem was that if an appraiser felt that he or she was being pressured, they didn’t have a strong enough system put in place to give them any power to stand up to that lender or broker.

One more thing; if a law is created and at some point it becomes obvious that it is a bad law, let’s just get rid of it.  We don’t need more laws to get around the bad one.

As always, if you would like to see what it feels like to work with a mortgage broker that can bring a little sanity to an insane world, give The Kunselman Team a call.

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What Can the Stimulus Package Do for Me?

September 24th, 2009

Every day when you turn on the TV you are bound to hear someone talking about the “Stimulus Package” and how it supposed to help home owners buy homes or refinance their existing mortgages but few people explain how this applies to the average person in terms everyone can understand.  Today I want to talk about two specific programs, the “First Time Home Buyers Tax Credit” and the DU Refinance+.  These are two of the better parts of the “Stimulus Package” and I would like to explain how these could help you or someone else you know, like and trust.

The “First Time Home Buyers Tax Credit” in very simple terms is a rebate you get from the government for buying a home.  Now this rebate does come with a few restrictions.   First, you must be a “First Time Home Buyer”.  That means you cannot have owned a property in the last 3 years, so just because you may have owned a home in the past doesn’t mean you can’t qualify for this credit.  Second, if you purchase a home for $80K or more you will get the full tax credit of $8,000; if you purchase a home for less than $80K, you will receive 10% of the purchase price in a tax credit.  In addition to the previous two restrictions there are some income restriction that you will want to talk to you tax advisor about.  But here is the beauty part of this tax credit too.  The tax credit is real money in your pocket.  This is not one of those programs where they will reduce your taxable income by $8,000 so you pay fewer taxes.  If you are scheduled to get a refund of $500 on your taxes, you will get a refund of $8,500 instead.  Now since most of you have probably already filed you 2008 tax returns you have two options when to collect this credit.  You can wait until you file you 2009 tax returns and you will get it then or you can amend your 2008 tax returns and get it this year.

If you have been considering buying a home, now is the perfect time.  Longmont’s real estate market has been stabilizing well and the state as a whole has actually seen its first decrease in foreclosures since they started monitoring them back in 2003.  But you cannot wait forever.  If you want to qualify for the “First Time Home Buyers Tax Credit” you must purchase a home before December 1st, 2009.

The DU Refinance+ program is designed for those who currently own a home and would like to refinance to a low interest rate but might not be able to because their property values have declined.  There are a lot of restrictions to this program so I will cover some of the big ones but each loan is looked at case by case.  First, to qualify for this program, your current first mortgage must have Fannie Mae as its servicer.  The easiest way to find out if your mortgage is owned by Fannie Mae is to call The Kunselman Team and we can look it up for you.  (Please note that even though you don’t make your mortgage payments to Fannie Mae, that doesn’t mean your loan is not owned by them.)  If Fannie Mae owns your mortgage, the second question is “Does your first mortgage currently or in the past had mortgage insurance on it?”  If the mortgage had mortgage insurance on it at any point, you do not qualify, but if your first mortgage is 80% of you homes value or less you may qualify.

This program is particularly helpful for those who have a first and second mortgage on their home.  Many people with first and second mortgage currently owe more than their home is worth.  By current lending standards, these people would not qualify for a refinance but with the DU Refinance+ Program, as long as their first mortgage is not more than 105% of their homes value, they may be able to qualify for this refinance to lower their monthly payments.  This is not a cash out refinance!  You can only refinance your existing mortgage and the loan closing costs.  If you have a second mortgage, that company must agree to the terms of the new loan but since we are usually bettering your situation, many are being pretty cooperative.

If you or someone you know, like and trust would like to see he or she qualifies for either of these fantastic programs, please contact Luke at Luke@TheKunselmanTeam.com or Shelley at Shelley@TheKunselmanTeam.com.

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