04
Aug
By support
Home Mortgage Tips

A Guide for Those Intrested In Refinancing a Traditional Mortgage to a FHA Mortgage

A Step-by-Step Guide to Refinancing a Traditional Mortgage to a FHA MortgageRefinancing a mortgage can provide a homeowner with many benefits, and some may be interested in refinancing their traditional mortgage into an FHA mortgage to take advantage of low interest rates. Depending on the specific circumstances, this step may lower the monthly payment, reduce interest charges, adjust the loan term so that it is more beneficial for achieving financial goals. Those who are interested in refinancing their mortgage may consider these steps.

Understand the Rules and Requirements

There are specific rules in place regarding refinancing under the FHA program. For example, the loan amount may be up to 96.5 percent of the value of the home, but the homeowner cannot take cash out of the refinance transaction. If cash is taken out, the loan-to-value limit under the FHA program is usually 86 percent of the property value.

These limits are in place for loan amounts that are $417,000 and under. Loan amounts that are between $417,000 and $729,750 will fall under a different set of rules. Homeowners should be aware of these rules to ensure that the FHA program is the best fit for their unique goals. If a FHA Mortgage does not fit your needs there are other optioans that may suit your situation better.

Review Goals and Current Mortgage Details

The next step for homeowners to take is to review their own financial goals and to define their reasons for refinancing. In addition, it is important for homeowners to contact their current mortgage company to learn more about their current interest rate, if there is a prepayment penalty and the current loan balance. Estimating the property value is also important. Homeowners may have a reasonable idea about property value, or they can contact a real estate agent for a valuation. When all of this information is taken into account, the homeowner will have a better idea about what to expect from refinancing.

Each homeowner will be in a unique situation regarding current loan details, property value and goals that they want to achieve through refinancing. It can be confusing to decide if refinancing is the right move to make, and it can be even more complicated to determine which loan program is a best-fit for the goals of the homeowner.

Those who are interested in refinancing their traditional mortgage into the FHA loan program or other refinancing program should contact their trusted mortgage professional soon to discuss the options and to determine if this is the best fit for their situation.

29
Jul
By support
Home Mortgage Tips

Understanding the Basics of How the Adjustable Rate Mortgage or ‘ARM’ Works

Understanding the Basics of How the Adjustable Rate Mortgage or 'ARM' WorksAs the 2009 recession fades into the sunset, the home buying market is showing signs of improvement in areas all over the United States. With more home buyers now entering the market, this becomes a good time to discuss one popular type of mortgage called the “Adjustable Rate Mortgage” or ARM.

What is an Adjustable Rate Mortgage?

An adjustable rate mortgage is a non-traditional home loan offered by lenders where the interest rate is tied to a specific rate index. The applicable rate on this type of mortgage is adjusted on an annual basis, usually beginning after the first 12 months. The rate index used is usually tied to one of the most popular indexes such as the London Interbank Offered Rate (LIBOR) or a cost-of-funds rate determined by the lending institution.

What Are Some Characteristics of an ARM?

ARMs are offered as a promotional option to help home-buyers purchase a home, beginning with an interest rate that is typically lower than normal markets rates. The loan provides for an adjustment period (the stated time-frames when the rate will be adjusted), the index to be used to determine rates, parameters on how the new rates will be determined at point of adjustment, and any caps related to the frequency and the minimum/maximum rates that will be charged during the life of the loan.

What Are Some Advantages of an ARM?

The primary advantages of an ARM begin with the borrower having access to a mortgage where the applicable interest rates are usually lower that those charged on fix-rate loans, which helps keep the monthly payments lower over the first couple years of the loan. This is particularly valuable to marginal borrowers who may need lower payments in order to qualify for a home loan. Also, many ARMs allow for principle prepayments without being charged a prepayment penalty.

What Are Some Disadvantages of an ARM?

The biggest issue related to an ARM in the unpredictability of the interest rate. During times of inflation, interest rate may escalate rapidly. This will result in a corresponding increase in related ARM rate, which might create payments larger than the borrower had envisioned. Consumers also need to be aware of potential rate errors or overcharges, whether intentional or not.

When Are ARMs Preferable?

The best time for a borrower to consider an ARM is if rates are high, but trending lower. This will keep the borrower’s payments lower over the life of the loan. Arms are also preferable if the borrower plans on holding the home for a shorter period of time. Finally, ARMs work well if the borrower wants to keep their initial payments lower in anticipation of high income in the future when larger payments are more feasible.

28
Jul
By support
Home Mortgage Tips

The HARP Mortgage Program is Coming to an End Soon – Here’s What You Need to Know

The HARP Mortgage Program is Coming to an End Soon - Here's What You Need to KnowThe United States government established the HARP program, otherwise known as the Home Affordable Refinance Program, to assist homeowners who are struggling with their mortgage payments. Initially, the program was founded in March 2009, and it has provided many homeowners with an easier route to adjusting their mortgage payments to make them more affordable. However, the program will be ending soon, and homeowners who have not yet taken advantage of the program and who intend to do so may need to act quickly.

When Does the Program End?

The HARP mortgage program will officially end on December 31, 2015. If you intend to apply for a mortgage under this program, you must have your application submitted by this date. However, a closing date may extend into early 2016. There are special rules and eligibility requirements that must be met in order for you to take advantage of this program, and these must be in place before you submit a full application. Therefore, it is important that anyone who is interested in applying for a mortgage under the HARP program take time initially to understand more about the rules and eligibility requirements in place.

What Are the Requirements?

It is important to note that the HARP program is not suitable for all homeowners who wish to refinance, and special requirements must be in place. Just a few of the requirements include that you must be in good standing with your current mortgage with no late payments within the last six months. You also cannot have had more than one late payment within the last 12 months. In addition, you must be able to pay for the new mortgage payment, and the mortgage must be a Fannie Mae or Freddie Mac loan. These are just a few of the requirements, and you will need to work with a mortgage professional to ensure that you qualify for these and other requirements that are in place.

The HARP program has already helped many homeowners who have been struggling with their mortgage payments. While the program offers a permanent solution to homeowners by re-establishing a new mortgage payment amount, the program itself was only intended to be temporary in nature. Because it will officially end at the end of 2015, any homeowners who are still interested in taking advantage of the benefits of the HARP program should consider speaking with their trusted mortgage professional soon to learn more about the requirements and to begin the application process.