The Mortgage Porter

What May Move Mortgage Rates the week of May 29, 2012

This past weekend, we made an addition to our family, a flat coated retreiver pup who we call Scupper. 

While this has nothing to do with mortgages or how low rates are right now, I just wanted to share this cute fella with you. 

Mortgage rates continue to be a very low levels. Many home owners are taking advantage of this and refinancing now - especially if they qualify for FHA streamline or HARP 2.0.  

We're also seeing purchase business continue to pick up in the Seattle area. If you are considering buying a home, it's crucial to get preapproved as early as possible so that you can present a strong offer as you may find you have competition with other buyers.

Here are a few scheduled economic indicators that are to be released the week of May 29, 2012.  For a short week, we have plenty of data being released that my impact mortgage rates. On Friday, we have the big dog being released: The Jobs Report. Of course unscheduled events may also impact mortgage rates such as what's going on with Europe's economy.  

Tuesday, May 29: Consumer Confidence

Wednesday, May 30: Pending Home Sales

Thursday, May 31: ADP National Employment Report, ADP Chain Deflator, Initial Jobless Claims, Gross Domestic Product and Chicago PMI

Friday, June 1: The Jobs Report and ISM Index

If your home that you're considering buying or refinance is located anywhere in Washington state, I'm happy to help you with your mortgage needs. I have been originating mortgages at Mortgage Master Service Corporation for the past 12 years where we offer conventional, FHA and VA mortgage loans including Fannie Mae Homepath and HARP 2.0.  Click here for your mortgage rate quote on your Washington home. 

I also share mortgage tidbits, including live mortgage rate quotes, via Twitter and Facebook. And you can always subscribe to my blog (upper right corner).  

LIVE POST: Mortgage Rates for Washington State and other Mortgage Miscellany

Remember, there are at least ten factors that impact how a mortgage rate is priced. The rates quoted below are for reference only. If you would like me to provide you with a mortgage rate quote for your home located in Renton, Redmond, Selah or anywhere in the state of Washington, click here.

8:30 am: quoting HARP 2 refinance for home owner in King County with excellent credit (scores of 740 or higher). Mortgage is securitized by Fannie Mae (this is different than where you make you mortgage payment) and there is no existing pmi on the loan to be paid off. The loan to value is just over 80% so this homeowner is just barely "underwater".  Loan amount is $322,000. Both quotes below include an appraisal fee of $500 since I will not know if the appraisal is waived until we run the scenario through DU (Fannie Mae's automated underwriting system).  Odds are, the appraisal will be waived. I prefer to quote "higher" and reduce fees than the other way around.

20 Year Fixed: 3.625% (apr 3.752%) with closing cost of $3850 and principal and interest payment (P&I) is $1,888.22. NOTE: if the appraisal is waived, closing cost will be reduced to $3350.

30 Year Fixed: 3.875% (apr 3.950%) with closing cost of $3200 ($2700 without appraisal) and P&I is $1,514.16.

8:40 am: DOW is currently down 30.

The Bond markets will close at 2:00pm ET today - Stocks will be open for a regular session closing at 4:00pm. All U.S. capital markets will be closed on Monday in observance of Memorial Day. 

9:14 am: HARP 2 refinance for a Freddie Mac securitized mortgage that has pmi. PMI on this quote is an estimate and appraisal fee may be waived if Freddie's automated underwriting system (LP) decides so.  Home owner with excellent credit is in the Bellingham area with an estimated loan to value over 105%.  

30 Year Fixed: 4.500% (apr 5.063%) $239,500 loan amount with P&I of $1,213.51. Closing cost estimated at $3768 includes 0.507 in discount and an appraisal fee, that may be waived. NOTE: pmi will be additional to the mortgage payment. If you currently have pmi and you're considering a HARP 2.0 refinance, the PMI will need to transfer to the new mortgage with the refinance.

10:30 quoting a rate-term refinance for a returning client who lives in Bellevue with excellent credit and a 80% loan to value.  Her loan amount is $488,000. 

30 Year Fixed: 4.000% (apr 4.072%) with closing cost of $4000 and P&I of $2138.82

30 Year Fixed: 3.875% (apr 3.995%) with closing cost of $6600 and P&I of $2106.66.

11:20: dealing with having to document where large deposits came from on a clients bank statement. Sometimes processing transactions can feel like you're peeling an onion. 

11:30: quoting 30 year fixed HARP 2.0 with a loan to value greater than 125%: 4.500% (apr 5.012) borrowers have credit scores of 700-719 and private mortgage insurance will need to transfer to the new mortgage. Principal & interest payment is $1,803.80 (pmi will be additional).  Estimated closing cost at $3620 includes appraisal fee and will be reduced if an appraisal waiver is issued by Fannie Mae.  Owner occupied home in the Vancouver area.

11:34: DOW is down 64.

12:30 pm: another Home Affordable refinance candidate in Snohomish County who currently has a first and second mortgage/HELOC. Her loan to values are roughly 88/120. The second lien holder will need to agree to the refinance by permitting a subordination. Most second lien holders are being very accommodating with subordinations for HARP 2.0 refinances. Homeowner estimates credit scores are somewhere between 720-739.  Homeowner tells me that when she contacted her bank, they insinuated she had to go through them for her HARP 2.0 refinance -- this is not true. You do not have to use your current mortgage servicer (bank) for your HARP 2.0 refinance. Here are her quotes:

30 year fixed:  4.000% (apr 4.075) with a loan amount of $398,000 and P&I of $1900.11. Closing cost are estimated at $3750 and may be reduced by $500 if the appraisal is waived.

15 year fixed: 3.375% (apr 3.485) with a loan amount of $397,000 and P&I of $2813.78. Closing cost are estimated at $2482 as this rate is priced with a slight rebate credit towards closing cost. Closing cost may be reduced an additional $500 if the appraisal is waived.

If you would like me to provide you with a mortgage rate qutoe on your home locaed anywhere in Washington state, please click here.

Mortgage Master Service Corporation will be closed on Monday, May 28, 2012 in honor of Memorial Day. 

 

15 Year Fixed Conforming Rates are VERY Low

I just quoted a 15 year amortized conforming mortgage with a rate under 3.00%.

This quote I posted on Twitter of 2.875% for a 15 year fixed in Tacoma (apr 3.211) is priced with a discount of 1.101% (we don't charge "origination points") at a 45 day lock period.

Mortgage rates have been at extremely low levels making buying a home more affordable and causing just about anyone who has a mortgage to consider refinancing, if they can. 

If you are considering a mortgage on a home located anywhere in Washington, I'm happy to help you with your home buying or refinancing needs.

HARP 2.0 for your High Balance (aka Conforming Jumbo) Mortgage

Conforming mortgages have a loan limit of $417,000 for a single family dwelling. Some counties in Washington, such as King, Pierce, Snohomish and San Juan, qualify for an additional higher limit known as "high balance" or sometimes called "conforming jumbo". In the greater Seattle area, the current high balance conforming loan limit is $417,001 to $506,000. (NOTE: FHA's high balance loan limit in greater Seattle is $567,500).  

High balance conforming mortgages may qualify for HARP 2.0, which allows home owners to take advantage of today's lower rates and refinance regardless of how much equity their home has lost.

You can learn more about Fannie and Freddie's programs and what I can offer Washington homeowners by reviewing my complete HARP 2.0 guideline.  

Here are some basic pointers for a high balance HARP 2.0 refi:

• existing mortgage must be securitized by Fannie Mae or Freddie Mac. This is different than who you make your mortgage payments to. If when you obtained your mortgage, it was considered a jumbo/non-conforming (vs a high balance conforming), then odds are, it's not a Fannie/Freddie mortgage.
• existing mortgage must have been securitized prior to June 1, 2009. This is different than when you closed your existing mortgage. Securitization often takes place weeks or even a few months after the mortgage is closed. 
• maximum loan amount capped at current high balance loan limits. In greater Seattle, this is currently $506,000. It's possible to currently have a true high balance conforming mortgage at a higher loan amount since they were previously at $567,500 and rolled back to $506,000 recently. HARP 2.0 is limited to current conforming loan limits. A cash-in refinance may be a consideration for those home owners with those loans who want to take advantage of HARP 2.0.
• no maximum loan-to-value unless your new mortgage is an ARM (they're capped at 105% ltv). It doesn't matter how much equity your home has lost - as long as it meets the rest of the criteria, HARP 2.0 may be an option.
• most transactions do not require appraisal. Once an application is submitted, we are able to run it through Fannie or Freddies automated underwriting systems (DU or LP) which determines if an appraiser is required. Currently, a majority of HARP 2.0 refinances do not require an appraisal.
• rate-term refinance only. You cannot take cash out or pay off a second mortgage/home equity line of credit.
• second mortgages and helocs will need to agree to be subordinated. This is so that the new first mortgage keeps first lien position. I'm seeing most second mortgage lien holders being very cooperative and agreeing to subordinate. 
• existing private mortgage insurance is okay as long as it can be transferred to the new loan. Even if your current mortgage has LPMI (lender paid mortgage insurance) it can probably be transferred to the new mortgage. 
• owner occupied, second homes and investment properties qualify including single family detached dwellings, condos and townhomes.
• one 30 day mortgage mortgage late allowed during the last 12 months IF it did not happen during the last 6 months.

If you would like me to provide you with a rate quote for your home located anywhere in Washington for a HARP refinance, click here. 

What if your scenario doesn't meet the criteria for HARP 2.0?  You do have some options.  FHA may be a consideration, however it does have both upfront and monthly mortgage insurance (which is increasing on June 11, 2012). Current non-conforming jumbo rates are very low, however they require equity of at least 15% (combined with a second mortgage).  

Congress is pushing for HARP 3.0 which would expand the above guidelines to allow more underwater home owners participate in the Home Affordable Refinance Program.  And President Obama is promoting his refinance plan which would allow mortgages that do not qualify for HARP (not securitized by Fannie or Freddie) to be refinanced using an FHA insured mortgage.  

If your home is located anywhere in Washington and you've been current on your mortgage payments, I'm happy to review your options. I have been originating mortgages at Mortgage Master Service Corporation for the last 12 years.  I'm required to provide the following language if I'm trying to solicit your HARP refinance - and if your home is anywhere in Washington state, I am!

Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes.  

If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.

You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites:

www.freddiemac.com/mymortgage or

http://www.fanniemae.com/loanlookup/

 

 

More Listing Agents Performing "Sniff Test" on Mortgage Originators

I'm noticing that more listing agents are performing, what I like to call, "sniff test" to check out the lender who has prepared the preapproval letter. By the way, I think this is an excellent idea. This is especially true if the listing agent is reviewing multiple offers, which is happening more in the greater Seattle area with non-distressed homes that are desirable and priced right.

The sniff test is typically a phone call by the listing agent so they can get an idea about the mortgage originator. The listing agent should not ask personal information about the potential home buyer (such as credit scores or available funds). 

When a listing agent contacts me, I know they're sizing up:

• how quickly I returned their phone call or email
• how experienced I am at closing my clients specific mortgage program (for example, Fannie Mae Homepath, Freddie Mac Homesteps or FHA transactions)
• how long I've been in the mortgage industry (over 12 years at Mortgage Master Service Corporation)
• how quickly we can close by
• to learn more about our company (family owned and operated since 1976)

I've heard from many local real estate agents that they need to make sure the loan can actually close. Often times, a preapproval letter may not be worth more than the paper it's written on if the mortgage originator has not done their homework with the actual preapproval.  NOTE: you are NOT preapproved unless you have provided your mortgage originator your income and asset documentation. 

I wrote about "investigating your preapproval letter" many years ago at Rain City Guide. The issue with preapproval letters then was probably that anybody and their brother was a mortgage originator back in 2007. Now there are far less mortgage originators however, if the mortgage originator works at a bank or credit union, they may still lack experience (they're not required to be licensed). A licensed mortgage originator may be new to the industry as well. Some large internet mortgage companies have been hiring LO's who can pass the national exam but still lack experience. There's a big difference between being a good a passing exams and successfully closing loans.

While the number of mortgage originators is dramatically down, it's still important to make sure your mortgage originator has the capability to see your transaction to closing. It may be a consideration to make sure your mortgage originator can pass a sniff test.

HARP 3.0? Changes proposed to help more home owners refinance

It's looking like we may eventually see HARP 3.0. This past week, President Obama has issued a "To Do List" for Congress which includes taking steps to make it easier for more Americans to refinance. President Obama says the average homeowner will save $3000 a year by taking advantage of today's historically low mortgage rates, which would not only help housing, it helps the economy.  

Obama's refi plan is not new - he's been pushing this for a few months. If adopted, it would allow "responsible home owners" who do not qualify for HARP 2.0 and are underwater to refinance using an FHA loan. The low payments the White House is using for examples, do not seem to be factoring FHA's mortgage insurance premiums, which would offset some savings. However, even with the mortgage insurance, many homeowners would benefit from the "Obama refi".

President Obama is also promoting shorter term mortgages which helps home owners build equity quicker. I hope HUD is paying attention to this. Perhaps they'll remove the "net tangible benefit" requirements which prevents home owners with FHA insured mortgages from doing an FHA streamline refi from a 30 year fixed FHA insured loan to a 15 year FHA loan - even if the homeowner qualifies for the higher payment! Currently, with an FHA streamlined refinance, the PIMI payment (principal, interest and mortgage insurance) must be lower by 5%. This is our government looking out for us. Again, I'm hoping this changes in light of recent comments by President Obama.

Senators Menendez and Boxer has introduced the "Responsible Homeowner Refinancing Act of 2012" in support of President Obama's To-Do List.

 

The proposed bill would make the Home Affordable Refinance Program more accessible to underwater home owners by increasing competition. Currently it can be challenging for home owners to find lenders who are willing to go beyond the 105% limits as banks have limited what they'll allow lenders to do. Mortgage Master Service Corporation recently added lenders who allow us to provide Washington home owners HARP 2.0 refinances without loan to value restrictions.

On Monday, NAMB shared information (via Rob Chrisman) that the proposals would "extend the HARP eligibility date to May 31st 2010. (The bill mentions that May 31st 2010 was chosen because most of the loans originated after this date already have a mortgage rate below 5%.)".  This would greatly help home owners who just missed the cut-off date of May 31, 2009. With any luck, HARP 3.0 will be based on the closing date of the mortgage instead of when Fannie or Freddie securitized the loan! 

If you would like a detailed mortgage rate quote for your home located anywhere in Washington state, please contact me. Remember, HARP is available for your primary residence, second home, vacation property and investment homes as long as they were securitized by Fannie Mae or Freddie Mac prior to June 1, 2009.

If you currently qualify for HARP 2.0, I don't recommend waiting for HARP 3.0. It may not happen and bank overlays seems to change almost daily on what loan to values they're willing to go to.

Do you want to stay informed of changes going on in the mortgage industry?  You can subscribe to my blog, follow me on Twitter or like me on Facebook.  Stay tuned!

Don't Delay: FHA Mortgage Insurance set to increase (again) for FHA Jumbos on June 11, 2012

Last month, HUD increased FHA mortgage insurance rates on both upfront and annual (paid monthly) premiums. Borrowers who are considering an FHA high balance (aka FHA jumbo) loan amount, will see another increase to FHA mortgage insurance next month.

Effective on case numbers issued on or after June 11, 2012, FHA annual mortgage insurance premiums for "high balance" FHA loan amounts by 0.25 bps. In the greater Seattle area (King, Snohomish and Pierce counties), this impacts loan amounts between $417,001 to $567,500 for 1-unit properties.

Currently, FHA high balance mortgages have annual insurance premiums per the table below.

Effective with FHA case numbers issued June 11, 2012 and later, the annual mortgage insurance premium for FHA jumbos will look like this:

Term greater than 15 years

• LTV equal or less than 95% = 145 bps
• LTV greater than 95% = 150 bps

Term 15 years or less with LTV above 78%

• LTV equal or less than 90% = 60 bps
• LTV greater than 90% = 85 bps

FHA annual mortgage insurance is paid monthly. To determine how much the annual mortgage insurance will impact your monthly mortgage payment, multiply the base loan amount by the bps. 

Today, a Seattle home with a 95% LTV and an FHA Jumbo 30 year fixed with a base loan amount of $560,000 would have an a monthly mortgage insurance of $583.00 (560,000 x 1.25% = 7,000 divided by 12 months = 583.33).

With FHA Case numbers issued as of June 11, 2012 or later, the same Seattle home will have a $116.67 higher monthly mortgage premium.  (560,000 x 1.50% = 8,400 divided by 12 months = $700.00 per month).

If you are considering an FHA Streamline refi in the greater Seattle area (King, Pierce or Snohomish counties) and your loan amount is $417,001 to $567,500 and you obtained your FHA loan after May 2009, you may want to start your refi now! NOTE: If your existing FHA mortgage was endorsed by HUD prior to June 1, 2009, you qualify for reduced FHA mortgage insurance premiums. If you would like a rate quote, click here.

If you are considering buying a home or are in contract to buy a home and you have an FHA jumbo, make sure your mortgage professional obtains your FHA case number prior to June 11, 2012.

I'm happy to help you with your FHA mortgage if your home is located any where in the state Washington. 

What May Move Mortgage Rates the week of May 15, 2012

As I write this morning's post (7:45 am) the DOW continues to slide down 125 points to 12695. When the markets are getting beat up, investors tend to seek the safety of bonds (like mortgage backed securities) which is what we happening right now. Mortgage rates continue to be very low.

If you would like me to provide you with a mortgage rate quote for your home located anywhere in Washington, please click here.

Here are some economic indicators scheduled to be released this week which may impact mortgage rates (no reports are scheduled to be released today). 

Tuesday, May 15: Consumer Price Index (CPI), Retail Sales and Empire State Index.

Wednesday, May 16: Building Permits, Housing Starts, Industrial Production, Capacity Utilization and FOMC Minutes

Thursday, May 17: Initial Jobless Claims and Philadelphia Fed Index

Data showing signs of inflation or an improving economy tends to cause mortgage rates to trend higher.  In addition to scheduled reports, unscheduled events, such as Europes financial situation or last week's announcement of JP Morgan Chase losing 2 billion also impacts markets and therefore, may impact mortgage rates.

We have many mortgage programs available to help home owners from Seattle, Redmond to Walla Walla and anywhere in the beautiful state of Washington take advantage of today's lower rates.  Whether you're buying a home or looking to refinance using HARP 2.0 or FHA streamlined refinances, if your property is located in Washington, I can help you.  

 

HARP 2.0 and Private Mortgage Insurance

The Home Affordable Refi Program (HARP 2.0) is a refinance program to help home owners who have lost home equity take advantage of today's historic low interest rates.  In order to qualify for this program, the existing mortgage must have been securitized by Fannie Mae or Freddie Mac prior to June 1, 2009.  Learn more about the HARP 2.0 program here.

Loans with private mortgage or lender paid mortgage insurance (LPMI) who meet the securitization requirement are also eligible for HARP 2.0. The terms of the private mortgage insurance, as far as the rate, remains the same as what the home owner has on their existing loan. The existing coverage is transferred to the new HARP 2.0 mortgage if the coverage is still in effect.

Borrower Paid Mortgage Insurance (bpmi) is the most traditional form of mortgage insurance. Homeowners will see this in their monthly mortgage payment. If you currently have private mortgage insurance included in your monthly mortgage payment, you will have it in your new HARP 2.0 mortgage payment too. 

Lender Paid Mortgage Insurance (lpmi) is not "seen" in your mortgage payment. LPMI is essentially financed into your loan. Homeowners who have LPMI probably traded the monthly pmi payment for a slightly higher interest rate when they obtained their last mortgage with a loan to value greater than 80%. Often times, LPMI scenarios offered lower payments than bpmi or combo loans at the time they were originated.

Some mortgages with LPMI were "single premium" meaning the coverage was paid for in one lump "single premium".  Single premium LPMI may be transferred to a new HARP 2.0 mortgage. 

It's also possible that the existing LPMI may be paid monthly by the lender. In this case, the private mortgage insurance company may be able to convert the "LPMI" from "lender paid" to "borrower paid".  The borrower is trading their higher rate mortgage with LPMI for a much lower rate with monthly pmi in their mortgage payment. The monthly savings has been significant.

It's my understanding that once PMI is transferred to a new HARP 2.0 mortgage, private mortgage insurance companies consider this a new loan. This means that when the pmi may drop off is reset. Typically pmi drops off your mortgage when your loan to value reaches 78% of the mortgages loan to value based on the appraised value.  If your home is significantly underwater, the private mortgage insurance will likely remain until you can refinance.  PLEASE DO NOT LET THIS STOP YOU FROM GETTING A HARP 2.0 QUOTE. Mortgage rate quotes are free and it's doesn't hurt to find out what your options are.  Click here for your HARP 2.0 quote for your home located anywhere in Washington state.

Here are two scenarios from quotes I provided yesterday, May 10, 2012, for HARP 2.0 mortgages with existing lender paid mortgage insurance (both borrowers have excellent credit):

Owner occupied home in Federal Way with a loan amount of $283,000 and an estimated value of $186,000 with LPMI single premium. With 30 year fixed mortgage and a rate of 4.375% (apr 4.515) they are reducing their monthly mortgage payment by $459 per month!

Owner occupied home in Renton with a loan amount of $311,000 and an estimated value of $215,000 with LPMI that was being paid monthly by the lender. 30 year fixed mortgage and a rate of 4.500% (apr 4.569%) they are reducing their monthly mortgage payment by $422 even with the lpmi converted to borrower paid.

NOTE: The difference in rate above due to having a mortgage priced with discount or rebate. How you have your mortgage priced (with discount or rebate credit) is up to you!

If you would like me to provide you a quote for your HARP 2.0 refinance on your home located anywhere in Washington, please click here.

I am required to have the language below if I am soliciting your Home Affordable Refi for your home in Washington...and yes, I would love to help you with your HARP (or any) refinance:

Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes.  

If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.

You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites:

www.freddiemac.com/mymortgage or

http://www.fanniemae.com/loanlookup/

HARP 2.0: Higher Loan to Values now available at Mortgage Master Service Corporation

Our company has been waiting and waiting for banks to remove their restrictions on loan to values for HARP 2 - Home Affordable Refinance. It's simply not happening quick enough to help underwater home owners in the greater Seattle area.  You can learn more about the Home Affordable Refi Program by checking out my online HARP 2.0 guide.

Mortgage Master Service Corporation has recently brought on additional lenders who offer expanded HARP 2.0.  We are now able to broker Fannie Mae - DU Plus HARP 2.0 loans with unlimited loan to values. We are in the process of adding other lenders who will allows us to broker Freddie Mac HARP 2.0 refinances with unlimited loan to values.  Currently, we are able to help if your loan to value is 105% or lower with a Freddie Mac HARP 2.0 mortgage.  UPDATE 5/11/2012:  I'm pleased to announce we now have unlimited LTVS for both Fannie Mae and Freddie Mac HARP 2.0 refinances.

For your HARP 2.0 rate quote on your home (primary, second or investment) located anywhere in Washington state, please click here.  You DO NOT have to return to your current bank or mortgage servicer (where you make your mortgage payments to).

I am required to have the language below if I am soliciting your Home Affordable Refi for your home in Washington...and yes, I would love to help you with your HARP (or any) refinance:

Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes.  

If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.

You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites:

www.freddiemac.com/mymortgage or

http://www.fanniemae.com/loanlookup/