Monthly Archives: June 2012
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.
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.
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.
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!
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.
CA Licensed Lender # DRE 00891765/ NMLS 342259
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.