Posts Tagged ‘Stimulus Package’

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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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Posted in Know Your Mortgage, Mortgage Industry, News, Real Estate Industry, Uncommon Useful Knowledge, Understanding Your Mortgage

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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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Looking Back at 2009

January 21st, 2010
  1. The $8000 first time home buyer tax credit that didn’t have to be paid back is introduced.
  2. Foreclosures declined but short sales were on the rise.
  3. Stated income loans went away, making it difficult for self-employed income borrowers to get a new mortgage.
  4. New mortgage guidelines tightened up.
  5. Large investors (unless they are cash buyers) got bumped out of the market.
  6. Resurgence of the small/first-time investor.
  7. Resurgence of the USDA 100% financing mortgage for rural areas.
  8. The Government injected lots of capital into the mortgage backed securities keeping interest rates low.
  9. The Government injects billions into the banks in the form of the TARP (Troubled Asset Relief Program) with the intent to modify existing mortgages.  The banks modify only a very small percentage of these mortgages.
  10. Fannie Mae and Freddie Mac introduce the DU Refinance + and the Home Access Programs designed for home owners to refinance who initially had 20% equity when they first got their mortgage and have seen their home values decline.  Program is a moderate success.
  11. Rates went up and rates went down.
  12. The Home Valuation Code of Conduct (HVCC) is introduced in May.  Appraisals must now be ordered through Appraisal Management Companies (AMCs). Many reports indicate this system is very flawed and has lead to higher costs to the borrower in obtaining a new mortgage.
  13. The Mortgage Disclosure Improvement Act (MDIA) is introduced in August.  It gives borrowers more information upfront before any money can be collected, but adds costly time to the mortgage process.
  14. The Government extended the $8000 First Time Home Buyer Tax Credit to June ’10 and added a $6500 repeat home buyer tax credit.  Experts say there will not be any more extensions.

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*New* Move-Up/Repeat Home Buyer Tax Credit

November 24th, 2009

Here are the Details of the extension of the Move-Up/Repeat Home Buyer Tax Credit

Definition Move-Up or Repeat Home Buyer:

A home owner who has owned and resided in a home for at least five consecutive years of the eight year prior to the purchase date.

1.  Buyers will have to have a binding sales contract signed by April 30th, 2010 and close by June 30th, 2010.
2.  The Tax Credit Does Not Have to Be Repaid!
3.  Up to $6,500 or 10% of the purchase price (which ever is less)
4.  Max Home Purchase Price $800,000
5.  Income Limits (For Full Tax Credit)
a.   Single Taxpayer = $125,000/year
b.   Married Taxpayers =  $225,000

6.  Income Limits (For Partial Tax Credit)
a.  Single Taxpayer = $144,999
b.  Married Taxpayer = $244,999

7.  Tax Credit vs. Tax Deduction
a.  A Tax  Credit is a dollar-for-dollar reduction of what the taxpayer owes.
b.  A Tax Deduction is subtracted from the amount of income that is taxed. (i.e. You get a reduction based on your tax bracket)

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