If you have been contemplating a cash-out refinance, there are some important questions to ask yourself before moving forward. Since a cash-out refinance is essentially an action that will replace your current mortgage with a larger one, be sure to gather all the facts before finalizing the plan. In a cash-out refi, you are accessing some of your home’s equity, or taking out cash on the portion of your home that you have already paid for. For those who plan to stay in their home and do not mind extending the length of their mortgage, it could be a good fit. On the other hand, while this is an excellent way to put your hands on a lump sum of cash that can be used in a variety of ways, there are a few pitfalls. [Read more...]
Although most people try to avoid it, the fact is, thousands of individuals will face debt at some point in their lives. However, many people can pay off these debts years ahead of time by taking advantage of a debt consolidation mortgage.
Whether it’s credit cards, auto loans, student loans, or home equity loans, chances are these debts have a higher interest rate than current, historically-low mortgage rates. A debt consolidation mortgage refinance is designed to bundle all of your expensive, short-term debt into a single, longer-term loan with lower rates. In other words, instead of keeping up with several different sets of payments, all of your expenses are combined with your mortgage, resulting in one bill to keep track of, as well as significantly lowered rates. [Read more...]
On November 28th the Federal Housing Finance Agency, or FHFA, released its September Refinance Report. The report detailed the efforts of Fannie Mae and Freddie Mac through the Home Affordable Refinance Program known as HARP. It was noted that through the third quarter of 2012, approximately 25% of all mortgage refinances were done through the assistance program.
It was revealed that since the beginning of 2012, over 709,000 loans were refinanced through HARP. In September alone, more than 90,000 borrowers took advantage of HARP. Many attribute the high volume of participation to changes that made the program more accessible and to the continuing low mortgage rates.
Further analysis of the Federal Housing Finance Agency report showed that nearly 50% of the homeowners seeking refinancing assistance in September had LTV ratios more than 105%. Approximately one fourth of them held loans with LTV ratios that exceeded 125%. September’s figures also brought to light that 19% of HARP refinances were changed to 15- and 20-year mortgages. As opposed to the more traditional 30-year loans, the shorter terms allow homeowners to build equity at a faster rate. [Read more...]
Since it came into effect in March of 2009, the Home Affordable Refinance Program, known as HARP has sought to assist underwater homeowners. The joint federal program offered by the Department of the Treasury and HUD had only 894,000 participants by the end of August 2010. So, in an effort to make it easier for troubled homeowners to apply and receive help, a new version of the program, called HARP 2.0, was introduced in December 2011. The Federal Housing Finance Agency, FHFA, released its Refinance Report for August in late October. Here is a brief summary of the report:
- In August, HARP was responsible for close to 25% of all Fannie Mae and Freddie Mac refinancing loans.
- For the month of August, there were close to 99,000 homeowners who refinanced their home loans with HARP.
- Since January 2012, over 618,000 mortgages have been refinanced through the program.
- The goal of HARP is to assist one million distressed borrowers by the close 0f 2012. Since 2009, when it began, over 1.6 million Freddie Mac and Fannie Mae mortgages have refinanced through HARP.
- Close to 18% of the underwater borrowers assisted in August chose to refinance with shorter-term mortgages. They will be able to build equity quicker with 15 and 20-year loans.
- Those that sought help, were truly in need, considering that more than half of them had loan-to-value ratios greater than 105%.
- Many of the recipients were in the following states: AZ, CA, FL, ID, and NV.
Read the PDF, which explains FHFA’s report in greater detail.
In related news…
CoreLogic Reports Decline in Homes Lost to Foreclosure
A recent press release from leading information and analytics firm, CoreLogic, revealed some promising news for the U.S. housing market. It seems that the number of homes lost due to foreclosure has been steadily decreasing, thanks to HARP refinancing, HAMP mortgage modifications and overall improvements in the economy.
The press release, dated October 31, announced the release of CoreLogic’s National Foreclosure Report for September, which provided monthly data on completed U.S. foreclosures and the overall foreclosure inventory. The report stated that there were 57,000 completed foreclosures in the U.S. in September 2012, down from 83,000 in September 2011 and 59,000 in August 2012. Before the housing crisis occured in 2007, completed foreclosures averaged 21,000 per month between 2000 and 2006. Completed foreclosures are homes that have actually been lost by owners to foreclosure – not those that are still in the process of being foreclosed. Since the financial crisis began, there have been approximately 3.9 million completed foreclosures across the country, according to CoreLogic. [Read more...]
The Home Affordable Refinance Program (HARP) has been a welcome relief to homeowners with negative equity. But what about the homeowners who aren’t underwater? Until recently, owners with equity had to rely on favorable loan to value ratios (LYVs) to secure affordable refinancing. Now, however, two U.S. senators have reintroduced a bill that would allow homeowners financed through Freddie Mac or Fannie Mae the same HARP guidelines and reduced fees, regardless of their LTV.
For anyone who has equity built up in their home, today’s extremely low mortgage rates make refinancing a great way to free up some cash. If you’re contemplating refinancing your property, start by considering these two to factors:
Terms – Since rate-and-term refinancing is essentially taking out a new loan for the balance on your mortgage; you have the freedom to make some changes. One of those is the term of your loan. You may have the option to keep it the same, shorten it, or extend it for a longer period of time. Of course there are many factors to consider when zeroing in on the term. For example, you may have had a few pay raises and now have a better cash flow. In that case, you may want to go for the shorter term. That may increase your monthly payments, however, you’ll build equity faster and likely save money over the course of the loan. If your salary has not changed or you anticipate big expenses such as college tuition, a renovation project or want to use the funds for debt consolidation, then keeping the same term or extending it may be a better alternative.
Thanks to a special program from the Obama administration, more mortgages were refinanced in the first seven months of 2012 than in all of 2011, according to data from the Federal Housing Finance Agency (FHFA).
Through the Home Affordable Refinance Program (HARP), more than 519,000 mortgages for borrowers with no equity in their home were able to refinance to a lower interest rate in January-July 2012. That’s almost 119,000 more than what was reported for all of 2011 when the total was 400,024.
Through HARP, hundreds of thousands of homeowners who were underwater in their mortgages were able to reduce their monthly mortgage payments by refinancing to today’s low rates. Since its inception in the spring of 2009, the program has helped an estimated 838,000 homeowners. At first glance, this appears to be an impressive number, but it falls very short of the program’s goal of helping 5 million underwater homeowners.
Freddie Mac’s weekly mortgage rate analysis was published earlier today and both the 30 year and 15 year fixed rate average fell to all-time lows. According to the release, the 30 year average sank from 3.49% down to 3.40% (.6 pt) and the 15 year went from 2.77% to 2.73% (.6 pt). The 5 year treasury index ARM average also moved lower to 2.71% (.6 pt).
Frank Nothaft, VP and Chief Economist at Freddie Mac noted that, “Fixed mortgage rates continued to decline this week, largely due to the Federal Reserve’s purchases of mortgage securities, and should support an already improving housing market. For instance, the S&P/Case-Shiller® 20-city home price index rose 1.2 percent over the 12 months ending in July, reflecting the largest annual increase since August 2010.”