CELEBRATING THE AMERICAN DREAM

Don’t you love sharing good news? I know I do. All the gloom and doom of today’s headlines seen on TV, the internet, or even the paper, makes us a bit sour and irritable. We look for some joy or good news to brighten our day. I hope you find encouragemnt in the housing news presented below, for you and for our country's economy. It seems especially fitting on the eve of our country's Independence celebration; home ownership is a vital component of the American Dream. Happy 4th of July.

Part of our mission at InSight Mortgage Group is to educate our clients so they can make the best financial decisions for themselves. And to help achieve our mission, we research the market trends ( especially the good news parts which get buried deep below the negative headlines) and share this information with our clients.

Encouraging news on the home front continues. Existing home sales were UP 2.4% to a 4.77 million annual rate. This is the third month in a row showing increased sales. They’re now 6.2% above their January low. Additionally, the percent increase for the last two months is the largest since April 2004. Inventory of existing home dropped to 9.6 months from April’s 10.1 supply. And, the median price of an existing home INCREASED to $173,000.

New construction homes also saw a decrease in supply from April’s 10.4 months to May’s 10.2. Inventories of new homes are now down 49% from their peak in mid-2006, and are at their lowest level since 2001! And, the Mortgage Bankers Association reported purchase loan applications UP 7.3%

A recently released report from Harvard University indicated there will be millions more echo boomers than there were boomers who first grew the housing market. The report projects household growth between 12.5 and 14.8 million in the next 10 years. This report also notes that price declines and low interest rates have brought affordability to many housing markets across the country.

Important information if you're considering a purchase or refinancing your current mortgage:

There are changes in the mortgage industry - that are government mandated - taking place now and in the near future. These would be nationwide rules, though additional requirements could be added by individual states. The intent is to increase safety for the borrower, by providing more transparency, and adding steps to help prevent deceptive lending practices. Additional steps now add time to the closing timeframe. In the past it was possible to close a loan within 30 days; now 30-45 days will become the norm, for both purchase and refinance transactions. Basically, the new appraisal process of using a third party appraisal company and more documentation requirements, along with the new Truth in Lending disclosure requirements, impacts the entire real estate and loan process.
As with many past consumer related regulatory changes, we can anticipate cost increases; (think back to the US pharmaceutical business and how health care & drug costs have risen due to regulation).

So, for buyers, critical decisions will need to be made promptly: loan application, type of loan and rate locked. Then, inspections & renegotiations if needed. Anything that can affect the closing costs, price, or date of closing need to be addressed as soon as possible or closing can be delayed.

What do these changes mean to you, if you’re purchasing a home soon or thinking of refinancing? Well, getting a loan will not be as easy, or as inexpensive, as we have known in the past. Don’t be a “fence-sitter”, get into the market now – housing is still affordable, mortgage rates are still historically low, and the cost of obtaining a mortgage is still reasonable.

Call or email us at 913-642-3334; michele@wantinsight.com or dickw@wantinsight.com for the most current information on rates and programs to best suit your individual needs. Blessings

The HOME AFFORDABLE REFINANCE Program: Questions and Answers

Our post the other day on the new Obama Home Affordable Plan generated alot of questions from you. We appreciate our readers and welcome your inquiries. The following information should clarify the REFINANCE portion of the program. We'll address the Modification portion in another blog.

I’m current on my mortgage. Will the Home Affordable Refinance help me?
Eligible borrowers current on their mortgage but who haven’t been able to refinance into today’s lower interest rates because of decreased home valuation, may be eligible to refinance into a 30 or 15 year fixed rate loan. Through the HAR program, Freddie Mac and Fannie Mae will allow the refinancing of mortgage loans that they own or that they placed in mortgage backed securities.

Who is considered eligible?
* Owner occupant of a one to four unit home.
* The loan is owned or controlled by Fannie Mae or Freddie Mac (unsure? See below)
* Are current on mortgage payments – haven’t been more than 30 days late in past 12 months
* The amount owed on the first mortgage is about the same or slightly less than the current value of the home
* Have a stable income sufficient to support the new mortgage payments.

How do I know if my loan is owned or has been securitized by Fannie or Freddie?
You should call your mortgage lender or servicer (company you send payments to) and ask about the program. Both have toll-free numbers and web submission processes to make this data available. Borrowers will enter/provide information to determine if either agency owns or securitized the loan. NOTE: other qualifying criteria must be met in addition to the loan being owned or securitized by either agency.
* Fannie Mae: 1-800-7fannie (8am-8pm EST) or www.resource_center@fanniemae.com
* FreddieMac 1-800-freddie (as above) www.freddiemac.com/avoidforeclosure

Who is my “loan servicer”? Is that the same as my lender or investor?
The company that collects your mortgage payments and who is responsible for the management and accounting of your loan is the servicer. Your servicer may also be your lender, which means they own the loan. However, many loans are owned by groups of investors (like pension funds) or individuals who buy mutual funds. These loans are managed by banks and other firms that specialize in servicing loans. If you have questions about the loan OR you are behind on your payments you should call your loan servicer at the number on your payment coupon or monthly statement.

I owe more that my property is worth. Do I still qualify to refinance under MHA?
Eligible loans include loans where the first mortgage will not exceed 105% of the properties’ current market value. Example: if your property is worth $200k, but you owe $210,000 or less, you may qualify. The current value of your property will be determined after you apply to refinance.

I have both a first and a second mortgage. Can I still qualify to refinance under MHA?
Borrowers with more than one mortgage may be eligible as long as the first mortgage is less than 105% of the value of the property. Eligibility will depend, in part, on agreement by the lender that holds the second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.

Will refinancing lower my payments?
The objective of the Home Affordable Refinance is to provide creditworthy borrowers who have shown a commitment to paying their mortgage the opportunity to get into a safe fixed rate mortgage with payments that are affordable today and sustainable for the life of the loan. You could see an immediate reduction in your payment if your rate is much higher than the current rates. But, if you’re paying on an interest only note, or have a low introductory rate that will increase in the future (variable rate), monthly payments may not go down if refinanced into a fixed rate, but may you avoid future payment increases AND you could save a great deal over the life of the loan. Your lender will give you a Good Faith Estimate that includes your new interest rate, mortgage payment and the amount you will pay over the life of the loan. Compare this to your current loan terms to see if it is an improvement. If not, then refinancing may not be right for you.

What is the interest rate and other terms of this refinance offer?
The objective of the refinance is to provide a fixed, affordable, and safe loan. There will be either a 15 or 30 term with fixed rate. The rate will be based on market rates in effect at the time of the refinance with any associated points & fees quoted by the lender. These rates may vary across lenders and over time as market rates adjust. The refinanced loans will not have prepayment penalties or balloon notes.

Will the amount owed on the loan be reduced?
No. Borrowers will be getting into safer, more affordable fixed rate loans. The principal amount owed to the first mortgage holder will not be reduced by refinancing. But the amount of interest repaid over the life of the loan will be reduced, saving you money.

Can I get cash out to pay other debts?
No. Only transaction costs, like the appraisal or title report fees, may be included in the refinanced amount.

How do I apply for a Home Affordable Refinance?
Call your mortgage servicer or lender and ask about the application process. PLEASE be patient. Detailed program requirements were just sent to lenders and servicers and it may take some time before they are ready to accept applications. Be prepared with your documents and information before you call.

What documentation will I need?
It's best to be prepared before you call. Have available:
* Household gross income (before tax), including recent pay stubs and/or other documentation of additional income sources
* Your most recent income tax return
* Information about any second mortgage on the house
* Account balances & minimum payments due on all credit cards
* Account balances & monthly payments on all other debts such as student loans and car loans.

If borrowers are delinquent on their mortgage, they will not qualify for the refinance plan.

Please call the office, 913-642-3334 with any questions or comments, or email me at michele@wantinsight.com We can provide insight and guidance to you and your specific financial picture.