While our retirement accounts may not be doing so well, mortgage rates have reached record lows after the debt ceiling turmoil and subsequent downgrading of the US credit rating this past week.
If you or someone you know missed their opportunity to refinance this past year or perhaps their situation has improved; e.g. income is better, loan balance lower and therefore now have enough equity, let us know and we’ll put you in contact with a great mortgage broker we have on our team and he will run an analysis for you to see.
The loan limit is still set for reduction on September 30th. The politicians leave us less than optimistic they will see the error of this change before it is too late. So please be aware, rates for loans over $625k up to $729k are about to take a noticeable step up. Portfolio lenders will be offering loans above this level and their guidelines are more restrictive too. You may have read in one of our previous blog posts that Bank of America retail stopped taking applications for this loan amount range weeks ago. Also be aware that the $625K is the maximum ceiling, however the maximum is set for each county based on the median sales price, so with all some hard hit areas in both Alameda & Contra Costa counties, the median is likely to be below the $625K, making it even more challenging for buyers in the Tri-Valley.
For home owners that have less than 20% equity and who may even be upside down, the HARP program continues to help many. For loans owned by Fannie Mae or Freddie Mac, borrowers can refinance at these low rates WITHOUT PMI (Private Mortgage Insurance). Sometimes the appraisal is even waived. Loan to value ratios can go to 115% in most cases and the cumulative loan to value ratio (sum of all loans on property) is limitless. Fannie and Freddie even call the program stated income however we find the lenders are still asking for income docs.
If you or someone you know is interested in purchasing a foreclosed home for investment, secondary or as their primary we recommend you take a look at www.Homepath.com. These are homes that Fannie Mae owns by way of foreclosure. The site is easy to search and prices are low. Sometimes they have third parties such as www.auction.com list the same homes. What is great about it for an investor is that Fannie Mae also offers a specific loan program for these purchases. If it is an investment purchase you are able to put as little as 15% down and NOT pay any mortgage insurance!!!!! Hard to believe. Conventional financing requires 25% down. Some clients are snapping up central valley homes at or under a $100k with very nice positive cash flows. The down payment savings allows them to hold for reserve and or upgrade/repairs.
Lastly, for anyone who is unable to put 20% down, we wanted to mention that mortgage insurance (required when less than 20% is made for a down payment) rates are lower than a year ago. Conventional lenders are also going to higher loan to values, especially on $417k and less loans. This means that FHA is not the ONLY option for low down payments. You can in some cases go to 97% loan to value on conventional conforming and have the private mortgage insurance (PMI) removed in as little as two years. Avoiding the FHA loan can be desirable given its’ restrictive PMI and costly up front mortgage Insurance (MI). For some it is the only way to go however it is nice to know there is a more affordable way to go with less money for a down payment.
If you are looking to refinance or purchase a home, give our mortgage broker Scott Eaton over at Landmark Mortgage Group a call on (925) 600-2002 – www.lmglending.com/ScottEaton.
