FHA Adding Capital Fast Enough?

September 27, 2010 By Leave a Comment

David Stevens, the head of FHA answered questions last week about weather or not his agency would need a “Bailout” from taxpayers. FHA doesn”t make loans, but they insure them, and with so many people without jobs, and properties being foreclosed on… that insurance fund has been tapped into pretty hard.

That’s one of the reasons FHA requested a change in the way MIP is charged.  Those latest, changes go into effect next week.

“If the fund has not gone negative and continues to remain positive it will be thanks to the quick actions of this committee and Congress giving us more authority and actions of this administration,” Commissioner David Stevens said in response to a question at a hearing of the House of Representatives Financial Services Committee.

He went on to tell the Committee:

The FHA is “running on its own. It is financially sound. It is below the minimum capital requirement, so we need to increase that capital but it is not (now) requiring a bailout. We will know more when the actuarial study is complete,” later this fall.

If you are considering a FHA Mortgage Loan in NC, call Steve and Eleanor Thorne, NC FHA Experts 919-649-5058  These changes could definitely make a little less attractive for some folks considering a FHA Streamline Refinance

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Is It Time To Refinance?

September 18, 2010 By Leave a Comment

Many of the people we are talking with WANT to refinance – but they figure it’s probably not worth it. Generally those sentiments run from two different camps, either the homeowner is concerned that they have no equity in the home to refinance (and don’t want to pay closing costs out of pocket), or they just figure they have a pretty good rate now, and don’t see a big difference from 5.75 to “whatever the mortgage rates are down to now.”

So let’s talk about what you SHOULD consider with a refinance…

The most fundamental consideration in whether a homeowner should refinance an existing mortgage is the break-even point, which means how soon the cost of the refinance will be recaptured through lower monthly payments. In general, most homeowners are looking for a three year recapture period.  If you are not going to recouperate in that time period… it might not make sense.

CHECK OUT INFORMATION ABOUT THE NEW HARP 2.0 REFINANCE PROGRAM

FOR UNDERWATER HOME OWNERS in North Carolina!  AVAILABLE MARCH, 2012

[Read more...]

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Does Obama Know Something We Don’t About the Economy?

September 3, 2010 By Leave a Comment

I read a TON of Economic Newsletters, watch CNBC, and Congressional hearings… I’m an economic junkie who misses Louis Rukeyser!  I’m always looking to see if I can figure out which way rates are headed.

So when the President came on the news this week to announce that the war in Iraq was over, and the pundits started asking why it was only a 15 minute address – I was kinda’ let down, because I had also been expecting that he would take this chance to give folks a “Positive Message” when it comes to the markets.

Without that Presidential Guidance, I’m back to the Economic Numbers for insight.  And here’s what they are telling me:

  • “… the public is no longer investing in stocks, but rather in bonds.  So far this year through July, bond mutual funds have attracted $224.4bn in net inflows including reinvested dividends.  ” — Ed Yardeni, September 1, 2010.” Which means a Consumer Spending spree is not going to get the Economy going.
  • “The Fed terminated the purchases of $1.25 trillion in GSE mortgages and mortgage-related paper in March.  Simultaneously, the housing-purchases credit subsidy ceased in April.  Housing went into relapse, as most economists expected.  Simply put, subsidize something and you get more of it; remove the subsidy and you find that you have borrowed economic activity from the future, and now you get less of it.” Cumberland Advisors  Which means ANOTHER Tax Credit is not going to get the Economy going.
  • Case Shiller Numbers indicate that the Housing PRICEs actually went UP during the 2nd quarter.  “While some may see these price gains from the trough as a sign of bouncing along the bottom, most experts believe home prices nationally will fall again, but not necessarily immediately.”  Which means the Housing Market is not going to get the Economy going.
  • Private sector employment decreased by 10,000 from July to August on a seasonally adjusted basis…  and today’s non-farm payroll job’s numbers showed 54,000 jobs lost in August (many of those from the Census Jobs that are gone).  So there’s not a surge of Employment to get the Economy going.

So was it just that the President didn’t have any positive news… or does he know something we don’t know? One of my favorite charts is the Four Bad Bears.

Permission from D Short

As you look at this chart – this “Bear” looks just like the other three. Maybe we ARE heading into a little dip – but it’s not really that’s alarming!  When you stop just looking at the headlines, and you look at the long term trend… things are not sky rocketing up, but they don’t look that bad! We are going to have a slowly improving picture!

Mortgage Interest Rates typically get LOWER when there’s BAD NEWS in the Economy… and they go UP when there’s good news. Believe it or not – the last three days we’ve had higher rates!  The Dow is Happy!

That’s not good news if you are waiting to Refinance!  NOW is probably the time to do it!

If you are considering a Refinance, call Steve and Eleanor Thorne, 919-649-5058  We have the best rates available, we offer FHA Streamline Refinances, Conventional financing, USDA Home Loans and VA Mortgage Loans!

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FHA Streamline Refinance When You Do Not Occupy Property

May 25, 2010 By Leave a Comment

FHA allows you to Streamline Refinance when you do not occupy property.  This was actually news to me, because we always tell folks that FHA is ONLY for use as a Primary Residence!

So we have a borrower who owned a home in Ohio (financed via FHA), moved to NC – but could not sell the home in Ohio. They purchased a home in NC while renting the other one out.

The rate on their home in Ohio is 6.25% – which is a good rate… except that FHA rates have DROPPED so much right now, they wanted to see if they could get a little better position!

Turns out we can save them $275 a month, AND keep it a FHA Loan! Yeah!

Here’s the deal – must be a Streamline Refinance, meaning:

  • no appraisal
  • no increase in the base loan amount
  • must pay the closing costs out of pocket
  • the lender CAN par price the loan to pay some of the costs
  • can NOT remove a co-signor

This is seriously good news if you have what is now Investment Property that has a FHA loan on it!  If you want to see if we can help you lower your payments with a refinance, call Steve and Eleanor Thorne, Mortgage Banker in Cary 919-649-5058

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Refinancing FHA Loans and Cash Back

April 6, 2010 By Leave a Comment

Head ScratchingWe’ve been in the mortgage business for a couple of decades, and with all of the changes that have happened, month after month… we sometimes get asked a question that you would think was a SIMPLE question… and we scratch our head and ask for time to research it.

When you are refinancing a FHA loan, you can get a CASH OUT loan, meaning you take cash out to pay for Education, or to Consolidate loans – or you might opt for a Streamline FHA loan.  With the Streamline FHA loan – you are limited to a small amount of cash back at closing, usually less than $500.

You still have to pay your closing costs, although some of those costs can sometimes be rolled into the loan, paid out of the escrow refund you get from the original mortgage holder, or covered in part by the Mortgage Loan Officer (that would be us!).  Having a “No Cost” refinance mortgage loan, however, is VERY DIFFICULT to coordinate with today’s lending requirements!

If you are considering a Refinance in Raleigh or Cary – please call us Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-649-5058.  We have the experience and the best mortgage rates!

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FHA Streamline Refinance Changes Effective 1/1/2010

September 25, 2009 By 2 Comments

With the release of several Mortgagee Letters (directions to lenders regarding coming changes) HUD announced detailed changes for Streamlined Refinances.

FHA Streamlined Refinances are loans that are FHA Loans that want to refinance to lower the monthly payment, change the terms (like go from an ARM to a Fixed Rate) or (in the past) go from a 30 year mortgage to a 15 year. 

Term reduction refinance transactions (going from 30 to 15yr mortgage) are no longer eligible for streamline documentation and must be underwritten and closed as no cash-out refinances.  Here are some of the changes announced that go into effect January 1, 2010:

  • At least six months seasoning on the existing FHA mortgage.
  • No 30 days late mortgage payments if less than 12 payments have been due. (loan is less than a year old)
  • No more than 1 X 30 days late in the last 12 months if the loan is more than 12 months, and NO 30 day late payments in the last 90 days. 
  • The new mortgage must provide a “net tangible” benefit for the borrower, meaning we must document that it is lowering the monthly payment, or you are refinancing to a 15 year from a 30 year which would reduce the overall cost of having the mortgage.
  • When refinancing from a fixed rate to a fixed rate or an ARM to an ARM, the PITI payment must be reduced by five percent or more. 
  • When refinancing from a fixed rate to an ARM, the new ARM rate must be at least two percent less than the current fixed rate. 
  • When refinancing from an ARM to a fixed rate, the new fixed rate may not be more than two percent above the current rate of the ARM. 

The maximum mortgage calculation has been revised for streamline refinances with and without an appraisal. (click here to see the rules for 2009) 

To Calculate the Maximum New Loan, Without an Appraisal:  Outstanding principal balance including 30 days interest from the first of the month – UFMIP refund + new UFMIP= Maximum new loan amount 

To Calculate the Maximum New Loan WITH an Appraisal:            The Maximum loan will be the Lower of the following calculations  

Calculation #1  Outstanding principal balance including 30 days interest from the first of the month – UFMIP refund+ closing costs and prepaid items for a new escrow account + new UFMIP= maximum new loan amount         (Discount points may not be included in the closing costs)           

OR  
 Calculation #2 97.75% of the appraised value + new UFMIP

 Lenders must certify in writing that the borrower is employed and has income at the time of the loan application.  (THIS IS NEW!!)  In addition, verification of any funds required to close are required. (ALSO NEW!!)   A copy of the payoff statement must be included in the case binder.  If credit scores are available, they must be entered into the FHA connection.  (ALSO VERY NEW and I’m afraid this is going to be bad news for some people)

The maximum CLTV with or without an appraisal is 125%. (For streamlines without an appraisal the CLTV is based on the original mortgage’s value.)   

For more details – click here.

If you are considering a refinance of your FHA loan in NC – please call us!  We know the details of getting the loan closed – and we have the BEST rates! 8o))  Steve and Eleanor Thorne, 919-649-5057

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FHA Making Sweeping Changes, AGAIN!

September 21, 2009 By 1 Comment

It’s been rumored for several months that due to raising default rate – FHA was in “trouble.”

Last week, FHA made several announcements that will ROCK the mortgage lending world again! 

Affecting the borrower, will be tighter rules on “FHA streamlined” refinances.  These refinances are for FHA to FHA loans, and prior to these announcements, if you had been making your payments on time… FHA didn’t really want to update income / employment history.  Well, that’s all rumored to be changing…. FOR NOW, the main changes to the Streamline loans has to do with number of months you must have the loan prior to refinancing.  For details, read here.

The BIGGEST CHANGE, however, IMHO is the change to networth requirements for lenders who want to do business with FHA.  It went from $250,000 (liquid) to $1,000,000.  This is a WHOPPING big number – and it means only BIG players will be selling directly to FHA.  Watch for MANY smaller shops, that are already getting gobbled up… to continue in that path!

WOW!  A MILLION DOLLARS LIQUID just to do business with FHA.  That’s a big number.

If you are considering a new home in Raleigh, or refinancing in Cary, NC – contact Steve and Eleanor Thorne.  919-649-5058

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2% Mortgage Rate on Refinance?

March 4, 2009 By Leave a Comment

The Obama Administration outlined today their efforts to help borrowers who need to refinance – and for various reasons can not.

If you’ve made your payments on time, here’s the current plan being floated… REMEMBER! This must be approved by Congress!

A Home Affordable Refinance Program to Provide Access to Low-Cost Refinancing for Responsible Homeowners Suffering From Falling Home Prices:

“Provide the Opportunity for Up to 4 to 5 Million Responsible Homeowners to Refinance: Mortgage rates are currently at historically low levels, providing homeowners with the opportunity to reduce their monthly payments by refinancing. But under current rules, most families who owe more than 80% of the value of their homes have a difficult time securing refinancing. (For example, if a borrower’s home was worth $200,000, he or she would have limited refinancing options if he or she owed more than $160,000.) Yet millions of responsible homeowners who put money down and made their mortgage payments on time have – through no fault of their own – seen the value of their homes drop low enough to make them unable to take advantage of these lower rates. As a result, the Obama Administration’s program will provide the opportunity for up to 4 to 5 million responsible homeowners who took out loans owned or guaranteed by Freddie Mac and Fannie Mae (the GSEs) to refinance through the two institutions over time. Reducing Monthly Payments: For many families, a low-cost refinancing could reduce mortgage payments by thousands of dollars per year. For example, consider a family that took a 30-year fixed rate mortgage of $207,000 with an interest rate of 6.50% on a house worth $260,000 at the time. Today, that family has $200,000 remaining on their mortgage, but the value of that home has fallen 15% to $221,000 – making them ineligible for today’s low interest rates that generally require the borrower to have 20% home equity. Under this refinancing plan, that family could refinance to a rate near 5.16% – reducing their annual payments by over $2,300. “Okay – here are some details!  The 5.16% rate mentioned above is the APR (they left that out).  There are also COSTS involved in refinancing which means that if your current rate is 6.5%, and the Obama Administration helps push mortgage rates to the mid to low 4% range – this might make sense.

The other BIG thing to notice is that they are talking about people who’s mortgage is currently owned by Fannie Mae and Freddie Mac. There’s a REALLY good chance your mortgage is owned by Wells Fargo, or BB&T or JP Chase Morgan and they don’t have to fall under these guidelines!
But it still doesn’t get us to that 2% mortgage rate on a refinance! THAT rate is only mentioned for folks who are about to lose their house… and that’s a TON more complicated!
For those details, click here.
If you want to find out more about qualifying to refinance in NC, please contact Steve and Eleanor Thorne, Connect With Us on Facebook, 919-649-5058.


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Cash Out of Home with FHA Refinance

January 5, 2009 By Leave a Comment

Do You Have Cash in Your Home?Have you heard the joke about the way you see your house, and the way the tax guy sees it and the way your appraiser sees it?

Well, it’s pretty funny… because everyone has a difference perspective!

If you believe you have some equity in your home, and you would like to take cash out, FHA might be your best bet! Not on a home like the one above (of course), the maximum FHA loan in Wake County is now $271,050… but FHA now allows you to cash out up to 95% of the value of the home!

FHA allows you to use this money for investments, to take a vacation, pay off bills, home improvements… almost anything you need!  Some folks think rates will be at 4.5%!  To find out how to get your 4.5% mortgage - click here!

Call us for details, and the current interest rates! Steve and Eleanor Thorne, Connect With Us on Facebook, 919-649-5058.

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