Refinances on the Rise

Of the many mortgage applications that are being received, the most common request is to refinance a current home loan.

Why are mortgage refinances on the rise?

Many homeowners want to take advantage of the historically low interest rates and reduce their monthly payment. When rates drop, it does not necessarily increase home purchases, but rather increases mortgage refinances.

The demand for refinancing has gone up since rates have dropped below four percent. Homeowners are reducing their monthly payments a great deal, and some even paying off their mortgage early by reducing the length of their term.

According to the Mortgage Bankers Association, nearly 30 percent of refinances are for the HARP 2.0. With the HARP 2.0 program, borrowers are able to refinance their mortgage regardless of equity as long as they are current on their payments.  It is estimated that HARP 2.0 refinances are lowering borrowers’ payments by as much as 26 percent according to the economists at the Federal Reserve Bank of New York.

What other programs are homeowners refinancing under?

The other popular program that has just recently been launched is the Federal Housing Agency’s version of HARP. Changes have been made to the FHA Streamline that will benefit FHA borrowers who have a mortgage owned prior to June 1, 2009. The FHA Streamline is an extremely easy refinance that can be completed in 30 days or less when done correctly. The biggest benefit of this program is that there are no costs involved. The borrower will pay nothing to refinance, and no costs will be added to the loan balance. It is just to lower the borrower’s interest rate and monthly payment.

If you are interested in refinancing your current mortgage to the historically low interest rates you can get started here.

Save Money on Summer Electric Bill

With the summer heat on the rise, you may be dreading the summer electric bill. We want to provide you with smart and simple ways to help reduce your electric bill and save you money this summer.

Set AC Temperature
When you are home set your AC between 70 – 75 degrees. However, when you leave your house, change the thermostat to 80 degrees. You don’t need the house cool while you are gone. The reason we don’t say turn the air conditioning off is because it could potentially cost more to re-cool the house entirely once you are home. But instead, lower the degrees when you arrive home and let it cool down within minutes.  This is just one simple tip that will hopefully help.

Move Hot Appliances
Another great tip is to keep heat-producing products a few feet away from the air conditioning unit.  These items would be lamps, computers, televisions, etc. The reason for this is those items produce heat, and can trigger the AC and make it run longer than necessary.

Heat Rises
If you own a two-story home, chances are the upstairs is much hotter than the downstairs. If this is the case, try running the AC upstairs and keeping the downstairs AC at a higher thermostat or utilizing fans instead.

Fan Investment
Consider investing in a whole house fan. This is one of the best investments that you install into your attic. Rather than having to run your AC, you open your windows and turn on the whole house fan. It works by pulling in the cool air through the windows from outside in a matter of seconds. Great investment!

New FHA Streamline Refinance Program

Today is June 11, 2012 which means the new FHA Streamline Refinance Program is available to FHA borrowers. The new changes to the FHA Streamline are a similar version of the HARP program that is available for Fannie Mae and Freddie Mac borrowers.

This new FHA Streamline program allows FHA borrowers to refinance to the current low interest rates, saving hundreds of dollars on their monthly payment and reducing the interest paid over time.

What are the qualifications for this New FHA Streamline Refinance Program?
For this special program your loan must be owned my FHA prior to June 1, 2009. If you received your loan prior to June 1, 2009 then you can utilize this special program.

What are the costs?
The great thing about this program is that it truly is NO cost to the borrower. There are no closing costs and no additional costs added to your loan balance. You truly get to refinance, lower your rate and monthly payment for free. This is done by providing the borrower a credit to cover all costs in the loan transaction.

What is required?
This loan process is one of the easiest refinance transactions available. There is no income documentation needed. There is no appraisal required. There is no verification of assets needed. There is no equity required. This program is just meant to help the borrower reduce their rate and monthly payment.

When it comes to pulling your credit profile, a mortgage only credit report will be pulled. This meaning, no other debts or obligations on your credit report will be pulled. We only care about your mortgage and how you have been paying it.

Will my mortgage insurance increase?
Actually, one of the great benefits of the New FHA Streamline is that the mortgage insurance will be lowered. The new annual MIP (monthly insurance premium) will be .010 points. The PMI will be .55 points. This is only available for this New FHA Streamline Program.

This is a great program for FHA borrowers and you should take advantage of such a great refinance opportunity.

If you are a California resident and would like more information about the New FHA Streamline Refinance Program you can contact Stateline Funding Corporation to get started right away.

CA Licensed Lender # DRE 00891765/ NMLS 342259

Tips on Buying a Good Home

1. Buy a Home You Can Afford

Make sure when choosing a home that you are comfortable with the mortgage payment. You do not want to purchase a home in a price range that will leave you scrounging for money each month just to make the payment. You need to keep in mind the other payments you still have obligations towards, such as a car payment, student loans and other expenses that add up.

A certified mortgage planning specialist analyzes your debts and will inform you on what a reasonable and realistic house payment is based on your scenario.

2. Make Sure You Can Stay Put

You don’t buy a home with the intention of moving right away. You should only purchase if you are planning on staying put for a few years. A home is an investment. If you are not able to make the commitment of staying in the home for a few years, then you may want to reconsider purchasing at that moment.

3. Get Pre-approved Before Looking

Without a pre-approval from a mortgage broker, you really are not in any position to look at homes. A pre-approval secures the fact that based on your income, assets, debts that you will qualify for a specific price range of homes. You should always seek a pre-approval from a lender to ensure you are not wasting your time, or a realtor’s time in looking for a home.

4. Know Your Credit

If you have issues on your credit report, you want to start getting those fixed before trying to buy a home. You need to also make sure you are current on all credit line payments and not maxing out your credit lines. Also, when you are in the middle of purchasing a home, DO NOT open new lines of credit. You do not want to open any new lines of credit, because that can affect your ability to purchase a home.

5. Do Your Homework

More often than not, homebuyers fall in love with a neighborhood but haven’t done their homework. You need to find more information about the taxes for that area as well as if there is an HOA (Home Owner’s Association) fee. These two things can really increase your monthly payment and you need to be aware of the full cost of the home. You not only have the mortgage payment, but you will also have to pay taxes, insurance and possibly an HOA fee.

A certified mortgage specialist has access to this information for any home on the market. Ask them to research a home in that area to find out what exactly you will be paying.

 6. Choose an Area With A Good School District

If you are just purchasing a home and have small children, or planning on having children, you want to make sure you choose an area that has a good school district. Since a home is an investment, you should only purchase if you are planning on staying a while. You will want a good school district, so do some research on the area before purchasing.

7. Start Saving Your Down Payment

Depending on what loan program you are able to purchase under, you will need to bring in a different down payment. Majority of homebuyers tend to put down anywhere between 3.5 percent to 20 percent of the home price. Start saving the down payment so when it’s time to make an offer on a home, you have the strength of a solid down payment.

8. Work With Respected Professionals

Buying a home is not a simple process, so you need to make sure you are working with the best people to help you through the process. This should be a fun and exciting time, but there will be some stressful moments. Do your research, read reviews, and choose a mortgage professional that knows what they are doing, and has the history to prove it. If you don’t have a real estate agent, your mortgage broker will more often than not guide you to a great real estate agent that will meet your needs.

15-Year Mortgages Becoming More Popular

As rates are dropping, it is becoming more common for homeowners to either refinance or purchase a home with a shorter loan term.

Currently, 15-year fixed rate mortgages carry lower interest rates than 30-year fixed rate mortgages, but obviously have a higher monthly payment. Last week, the 15-year fixed rate mortgage fell below three percent to 2.97% on average. This is incredibly low, which makes sense why homeowners are taking advantage and reducing their loan terms.

How does this work to your benefit?

Since a 15-year mortgage is clearly half the time of a 30-year mortgage, your monthly payment is going to be higher; however, it’s not doubled like most people may think. When making your monthly payment, a good chunk is mainly dedicated to paying interest on your loan, and a smaller portion is actually paying down the principal balance.

The reason homeowners are choosing a 15-year fixed rate mortgage is to avoid the thousands of dollars that they would be paying on mortgage interest.

For example, when comparing a 15-year fixed rate mortgage to a 30-year fixed rate mortgage you can potentially save $46,000 in long-term costs for every $100,000 you borrow. These are estimates, but it gives you an idea of the potential savings you could make by either refinancing to a shorter term, or purchasing a home for a shorter term to lock in these low-interest rates.

According to Freddie Mac’s first quarter results for 2012, 31% of refinance transactions that occurred chose to shorten their loan terms.

To determine if you are in a financial situation that will benefit you to lower your loan term, you should speak with a mortgage professional in your area. If you are in California, we will gladly help you and discuss what your options may be and what will benefit you in the long term.