Interest rates are now at their lowest levels ever! For well-qualified borrowers I am quoting interest rates in the mid-to-low 4% range for fixed and mid-3% range for adjustable rate conventional financing transactions. However, many home owners haven't refinanced to take advantage of today's low interest rates because they are concerned about the potential lack of equity that they have in their property.
Homeowners with a mortgage held by Fannie Mae or Freddie Mac, make their payments on time, have good credit, and can document their income may be able to refinance their mortgage and take advantage of the following NEW flexible lending guidelines:
- For home owners with mortgages held by Fannie Mae they can refinance their loan without an appraisal report. Think about this for a moment. Not only do home owners not have to pay $375 for an appraisal inspection but will know upfront their loan terms based on the value Fannie Mae's automated valuation model determines that the house is worth. The automated feedback that I received from processing Clients refinance requests through Fannie Mae's valuation model tends to be exceptionally accommodating to the homeowner.
- If the current mortgage is held by Freddie Mac an appraisal report is required.
- Regardless of the new property value both Fannie Mae and Freddie Mac are offering a waiver on having to obtain mortgage insurance if the original loan amount was 80% of the appraised value. For example if the home owner purchased or refinanced their house when it was worth $100,000, taking out a $80,000 mortgage, and the house is now worth 5% less than the "no cash-out" refinance mortgage amount the home owner will not have to obtain a mortgage insurance policy. This means home owners can still refinance their mortgage even if they are upside down (i.e. underwater) on the outstanding mortgage(s) in relationship to today's property value.
Note, when a home owner makes their mortgage payment this is to the loan servicer (i.e. Bank of America, Wells Fargo, Chase, etc.). So even though the payment is to a bank the end holder or owner of the loan may be Fannie Mae and Freddie Mac.
To determine if Fannie Mae or Freddie Mac own your current mortgage reference the following links:
Fannie Mae: http://www.fanniemae.com/loanlookup/
Freddie Mac: https://ww3.freddiemac.com/corporate/
If there is a second trust mortgage on the property this loan will have to be "subordinated" to the new first trust mortgage. The second trust lender will most likely need an appraisal report when reviewing the subordination request. If the current mortgage requires mortgage insurance or there is a lender paid mortgage insurance in force these programs are not available to the home owner and the home owner should contact the loan servicer to determine if they can assist them in lowering your interest rate.
Interest rates have rallied and improved dramatically since the recent European debt concerns and what is most important is that due to the highly unusual set of circumstances that exist in the market, those home owner who are acting quickly are saving. Bottom line, interest rates are "smokin' hot" right now - but won't be for long so go out and talk to your past Clients and give them valuable information that will help save them some money. One more thing. After you deliver this information make sure to ask your Client if they know anyone thinking about buying or selling a house and can benefit from your services.
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