this past week we marked the official start of the Making Home Affordable Refinance Program. We expect that this may help thousands of NH homeowners! The Making Home Affordable program turns a blind eye with respect to falling home values, approving mortgage applications based on borrower payment history and benefit to the NH homeowner. NH mortgage applicants have to meet a few basic qualifications to take advantage of the Making Home Affordable refinance program.
First, your existing NH mortgage must be with either Freddie Mac (Freddie) or Fannie Mae (Fannie). Fortunately, both of these agencies provide a way to check online. It's best to start with Fannie since she's the bigger sister (has more of our NH loans) and because Freddie's online tool requires your ss # (It's okay to enter, I've checked it out and site is secure!).
Next, you must have a perfect mortgage payment history over the last 12 months. Even one payment made 30 days late disqualifies you from participating in the Making Home Affordable program. It is okay, however, if you were 20 days late on your payment and incurred late fees.
And lastly, the balance on your mortgage cannot exceed your home's value by more than 5%. The math formula is (Mortgage Balance) / (Home Value). If the quotient is greater than 1.05 then your loan-to-value exceeds 105% and you are not eligible for Making Home Affordable.
Now, assuming you meet the criteria, there are some noteworthy details of the Making Home Affordable program:
If your current NH mortgage doesn't have mortgage insurance, you won't have to pay it after refinancing -- even if your new loan-to-value is greater than 80%. If you do have mortgage insurance presenlty on your loan, there's a plan for that, too ... we're just not sure yet what that plan is! That part of the plan is still in the works but we expect more details shortly. For the most current info on this program head over to our NH mortgage blog and subscribe to our newsletter!
All NH mortgage refinances under this program (and pretty much every other program available) require income verification -- even if the original mortgage was a stated income loan.
Second mortgages cannot be paid off through this program. They have to be subordinated. That can be some heavy lifting so make sure that, if you've come this far, you're working with someone who knows what they're doing!
Fannie and Freddie each of other guidelines that need to be followed as well. (Links to their sites can be found at www.NHLoanInfo.com)And, of course, their guidelines are different from each other! Like most government programs, their guidleines are created by the pound and all of us are learning as we go.
My recommendation would be to give their guidelines a brief review before talking with a local NH mortgage lender (like me!) so that you have a general understanding. If you have a NH mortgage and you have specific questions about the Making Home Affordable program and your own eligibility, first check to see if Fannie or Freddie is backing your loan. If they are, pick up the phone and call me to plan the next steps. While, the program doesn't end until June 10, 2010 , low NH mortgage rates probably won't last that long.
Found this home and did a bit of calculating on the payment side and, sure enogh, home values are definately in the affordable range again. With "right pricing" of homes, interest rates at historic lows and everybody and their brother Senator lined up to make the housing market right again, I think we may be in for a bit of competition this Spring. Get a jump and take a look at this property, our latest "Featured Home".
I have posted a great interview I recorded with Brian Larrabee of Estate of Mind, Inc. We discussed NH home vales and NH mortgage financing but the points raised are applicable in most parts of the country.
To hear the interview head over to our NH real estate and mortgage blog.
If you would like to hear more of our interviews, or would like to be featurd in our 2009 interview series, just drop me a line through our NH mortgage site and Happy New Year to one and all!
Earlier this year and under pressure from the government, mortgage lenders made more than 200,000 loan modifications to delinquent homeowners.
The modifications came in one of three forms, or a combination:
Interest rate reduction
Loan term extension
Principal forgiveness
But despite the modifications, as of October 1, more than half of the homeowners that received assistance were already two months behind on their modified monthly payments.
This late-pay statistic was a focal point on Capitol Hill yesterday as the government admitted delinquencies "were larger than [they] thought they'd be". Loan modifications are proving inadequate at slowing foreclosures and yesterday's session opened the door to more effective foreclosure prevention measures.
However, of all of the statistics published, there was one of particular interest.
Based on its loan modifications to-date, the FDIC has found that modified borrowers default far less when new monthly payments are less than 38 percent of monthly household income. This is important because Freddie Mac guidelines for ordinary mortgage applicants currently cap that rate at 45 percent.
If the 38 percent figure holds up long-term, it may lead mortgage lenders to permenantly reduce maximum debt-to-income allowances. Already, mortgage insurers have taken this step so it's not out of the question for lenders. Tighter guidelines mean fewer mortgage approvals.
If you're unsure of whether now is a good time to buy a home, consider that mortgage rates are low, mortgage guidelines are tightening, and foreclosure prevention efforts reduce the supply of available homes.
Prices may not have bottomed, but the market is giving everyone a lot of reasons to consider buying now.
Mortgage markets improved last week for the second week in row. After the Federal Reserve said it would use "all available tools" to stimulate the economy, traders responded by driving mortgage rates to 50-year lows.
It didn't last long, however.
After bottoming out early-Wednesday morning, mortgage rates trended higher all the way into Friday's closing. It was the third time in 2008 that a sharp mortgage rate drop lasted less than one full day of trading.
Many Americans took advantage of the historically-low mortgage rates, locking in new home loans below 5 percent. And, in general, these homeowners shared 4 characteristics:
Credit scores of at least 720
At least 20 percent equity
Relatively low debt versus household income
Ongoing relationship with a loan officer
Now, the first 3 bullet points are easy-to-understand but it's the fourth one that really mattered -- it's the trait that got people "real-time access" to low rates the moment they published.
After all, it wasn't until Thursday morning that the press ran its stories about "4.5 percent mortgage rates" and, by that time, mortgage rates had already retreated -- by as much as a full percentage point in some cases. Thursday morning's news was a half-day too late.
Still, mortgage rates do remain low.
This week is trade-shortened and thick with data. In addition to two pieces of housing news and a consumer sentiment survey, we'll get a look at the Federal Reserve's preferred Cost of Living index. All four data points are expected to validate the recession, so don't expect mortgage rates to move much.
Instead, the biggest threat to mortgage rates this week is momentum. If mortgage rates tick higher Monday and Tuesday, expect that to continue Wednesday into the 2:00 P.M. market close and then to resume again Friday.
Markets are closed Thursday for the federal holiday.
When it comes to mortgage rates, sometimes it's better to "act now".
On Tuesday, mortgage rates fell to their lowest levels in 4 years. It happened because the Fed said it would "employ all available tools" to resuscitate the economy.
On Wednesday, however, the markets had second thoughts.
After considering the long-term implications of a near-zero percent Fed Funds Rate and the cumulative cost of government intervention to-date, suddenly, traders grew fearful that U.S. government action would devalue the dollar and lead to inflation -- the enemy of low mortgage rates.
As a result, mortgage markets unwound.
At first, the exit was a slow and orderly. Then, without warning, investors began a full-on sprint for the exits. By the end of the day, mortgage rates were higher by as much as a half-percent. Nearly all of Tuesday's big gains were erased.
In hindsight, the reversal Wednesday wasn't all that surprising -- it's the same trading pattern we've seen twice already this year. The first time was after the Fed's "surprise" rate cut in January, and the second time was after the federal takeover of Fannie Mae and Freddie Mac in September.
Sharp rate drops tend to be followed by immediate bounce-backs, it seems.
But, unfortunately, not every would-be refinancing homeowner saw the increase coming. While those that locked at the first opportunity to save money are sitting pretty today, the rest that "waited for rates to go lower" are likely kicking themselves about it.
Going forward, mortgage rates may fall, or they may not. We can't possibly know. But we've now seen the pattern 3 times now -- when mortgage rates plunge like they did Tuesday, they rarely stay that low for long. When you find a rate you like, get in and get locked as soon as possible.
Sleeping on it for even one night may end up costing you dearly.
For more information on this post or mortgage financing in general, check us out at NH Mortgage Experts
A "Housing Start" is a new home on which construction has commenced and in May, Housing Starts fell to a 17-year low nationally.
At first glance, this may seem like a negative for the already-battered U.S. housing market.
It's not.
Falling Housing Starts reflects the broader real estate market and shows us that builders are working hard to get their already-built homes "off the books".
It would be foolish for them to build new homes now -- each new unit makes selling the existing ones tougher.
So, when we look at the figure objectively, we can see that Housing Starts reaching a 17-year low is actually good news -- real estate prices are based on Supply and Demand, after all.
With Housing Starts touching new lows, we can infer that there will be fewer new homes coming on the market in the coming months and that should help support higher home values nationwide for everyone.
There was no rest for the mortgage-rate weary last week.
As mortgage bonds sold off early in the week, sharp rate hikes followed. A steady stream of better-than-expected economic reports had re-ignited inflation fears, drawing money from the bond market.
On Friday, however, the money flow reversed on a triple threat to the U.S. economy:
The Unemployment Rate took its biggest one-month jump in 22 years
By themselves, each of these events normally would be bad for mortgage rates but the Friday combination of all three led to a huge stock sell-off and renewed demand for bonds -- including the mortgage-backed kind.
Despite Friday's reversal, mortgage rates were higher on the week, overall.
This week, there won't be much economic data this week but there will be six Federal Reserve members making speeches to the public.
The most anticipated of the set is Fed Chairman Ben Bernanke's address Monday evening on the topic of "inflation". Markets will be closed when Bernanke speaks so expect a delayed market reaction Tuesday morning.
Throughout the week, markets should continue their long-standing battle between the fears of inflation and the fear of recession. It's the same back-and-forth that we've seen since late-2007.
It's also the primary reason why mortgage rates rarely stay still anymore.
Mortgage rates are a big deal when you're buying a home.
With even the slighest uptick in rates, 30 years of mortgage payments can get substantially more expensive and one of the most substantial threats to mortgage rates is an economic event called inflation.
Inflation's influence on mortgage rates is so large that markets can get jarred on just the mention of it and that's exactly what happened Wednesday when Fed Chairman Ben Bernanke uttered "inflation" 55 times in a 5-page speech at Harvard.
The speech started at 2:45 P.M. ET and by 2:53 P.M., the damage was done.
Market players interpreted Bernanke's remarks to mean that inflation may be worse that previously expected and mortgage rates moved up by 0.125 percent, or $8 per $100,000 borrowed.
This equates to $2,880 in extra payments over 30 years.
If you're actively shopping for a home loan and rapid rate movements make you nervous, consider locking in your mortgage rate today; rates have been especially jumpy all year and don't look to smooth out anytime soon.
If you are a potential home buyer or an agent working with buyers, please take note:
Mortgage financier Fannie Mae is toughening its mortgage application decision-making process effective Monday, June 2, 2008.
The new guidelines will force many Americans to face higher mortgage rates, higher loan fees, or to be shut out from "prime" mortgage rates altogether.
The new "mortgage rules" include the following changes:
Higher income levels required for basic approvals
Interest only loans are now considered high-risk
Condos are now considered high-risk
60-day mortgage lates within 6 months are a major red flag
Not all of the changes are for the worse, though.
In the new guidelines, self-employed borrowers will no longer be viewed as more risky than a W-2 employee. This will help small business owners and commission salespeople get more mortgage approvals than in the past.
Fannie Mae agreed to honor all mortgage approvals granted prior to its changes, so if you've been putting off that pre-approval, consider talking to your loan officer before the weekend starts.
Your mortgage approval will be much more lenient today than if you wait until Monday.
To read more of my blog entries and find out more about the financial world around us, click here!
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
Earlier this year and under pressure from the government, mortgage lenders made more than 200,000 loan modifications to delinquent homeowners.
Mortgage markets improved last week for the second week in row. After the Federal Reserve said it would use "
When it comes to mortgage rates, sometimes it's better to "act now".
A "Housing Start" is a new home on which construction has commenced and in May, Housing Starts fell to 
There was no rest for the mortgage-rate weary last week.
Mortgage rates are a big deal when you're buying a home.
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