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As the housing bubble grew bigger and bigger up until 2008 then burst, housing prices plummeted nationwide.
The mortgage industry during that period was awash with subprime loans and alternative lenders that increasingly introduced toxic loan after toxic loan. Those loans along with the lenders who made them are no longer around. But another major player in the industry took a major hit as well, private mortgage insurance companies. Read the rest of this entry »
Mortgage rates inched up a bit last week with 30 year rates averaging 4.29 percent with 0.7 points and 15 year rates at 3.30 percent also with 0.7 in points. These rates are up from the week before at 4.22 and 3.27 percent respectively.
This is the second highest series of rates reported for the month of November just below the 30 year rate of 4.35 and 15 year of 3.35 reported on November 14,this according to Freddie Mac’s weekly mortgage survey. This time last year, 30 year fixed rates averaged 3.35 percent for November, nearly a full percentage point lower.
Interest rates have been trading in this range since last summer when the 30 year note broke the 4.00 percent barrier appearing never to return but haven’t hit the 5.00 threshold since April of 2010. Will we see mortgage rates approach 5.00 percent soon? We got close last September when 30 year rates averaged 4.49 percent but will need a significant nudge to increase another half percent. What sort of nudge might that be?
All eyes this week are on Friday’s unemployment report, releasing payroll numbers for the month of November. Recall the brief partial government shutdown and the temporary jobless count which surprised many as more jobs were created in October than anticipated. For November, the pundits are expecting nonfarm payroll job creation to be around 185,000 and the rate back to 7.2 percent.
We could perhaps get a glimpse of that number when initial jobless claims are released on December 5, the day before the unemployment report, but anything too far above or below the 335,000 expected to file for the first time shouldn’t have too much of an impact.
The Fed doesn’t meet again until January but they will all be taking a serious look at Friday’s report. If the economy is doing better than expected and anything close to 225,000 new jobs listed, rates could very well approach the 5.00 barrier within a matter of days.
Applying for a home loan often means providing your lender with your current income level. Income from your job is pretty well cut and dried if you’re a wage earner. You need only provide copies of your most recent pay check stubs that cover a 30 day period along with your recent W2 forms.
But sometimes calculating income isn’t all that apparent. Sometimes borrowers have additional income beyond what is reported on the 1st and the 15th of each month or is different from their hourly wages. Borrowers can also have income from commissions, bonuses and overtime. And while lenders certainly welcome the additional cash in the bank there are specific guidelines they must follow when allowing the income to be used for qualifying. Read the rest of this entry »
Almost one year ago, Congress introduced the Responsible Homeowners Act of 2013, an act that would make many important aspects of HARP 3.0 a reality. Although not yet passed, recent comments from the Obama Administration indicated HARP 3.0 may be a real program by the end of 2013.
But regardless of what Congress does or does not do, the existing HARP 2.0 program is directed by the Federal Housing Finance Agency, or FHFA. In theory FHFA can change the current 2.0 program to 3.0 even without Congressional approval.
Okay, so what is the big deal about 3.0? The big change is that any loan may be eligible, regardless if the loan was underwritten to Fannie or Freddie guidelines. And that’s a huge change. At one point in the last decade, so-called “alternative” and “subprime” loans acquired a significant market share just prior to the housing bubble burst. Those loans, while popular, required little to no down payment and little if any verification of income and assets.
That trade-off meant the borrowers could get approved but at higher rates than conventional loans could offer. Yet they still cannot refinance due to the lack of equity and having not been sold to Fannie or Freddie.
HARP 3.0 changes all that. And if you fit into this category, you need to be prepared.
What should you do to prepare yourself to take advantage of HARP 3.0?
Well, no one knows what the guidelines might look like at this point. It’s best to over prepare than the other way around.
Appraisals may not even be required for HARP 3.0. But don’t bank on that. Keep your home in good condition and ready for an appraiser to do an inspection.
Many HARP 2.0 loans don’t require an appraisal, mainly because the home appraisal is already on Fannie Mae or Freddie Mac’s books. If you have a non-Fannie or –Freddie loan, there’s a chance an appraisal may be required because the agencies don’t know anything about your home as of yet.
Making Mortgage Payments
Whatever the final guidelines of HARP 3.0, you can bet they will include a requirement that the homeowner has perfect or near-perfect mortgage payment history, as HARP 2.0 does now.
If you’ve been late on your mortgage recently, start making all your payments on time. Once you have 12 months of consecutive, on-time payment history under your belt, you’ll be much more likely to qualify for HARP 3.0.
The current HARP 2.0 program allows for a rental property or second home to be refinanced yet it’s possible that 3.0 will only be available for a primary residence.
If you plan to move out of your home and convert it into a secondary resident or investment property, it might be a good idea to keep living in it as your primary residence so you can refinance into a lower rate if and when HARP 3.0 rolls out.
There’s a slight chance that HARP 3.0 will be a “streamline refinance” program, meaning you won’t need things like paystubs and tax returns.
But to be on the safe side, keep income and asset information accessible, but in a secure place. You may need full documentation to be approved for HARP 3.0.
Prepare for Longer than Usual Lines at your Lender’s Office.
Again, HARP 2.0 relaxes many credit guidelines but again you need to be ready to go. In fact, you may want to have a loan application completed, ready and waiting at your lender’s office. If HARP 3.0 does indeed come to pass, lenders might find themselves a bit overwhelmed, extending loan processing times considerably.
According to Freddie Mac’s most recent weekly mortgage rate survey, 30 year fixed rates fell to 4.22 percent with 0.7 in points and fees and the 15 year at 3.27 percent again with 0.7 in points and fees associated with obtaining the mortgage loan. The previous week reported slightly higher rates at 4.35 and 3.35 percent respectively yet the week before those same rates came in at 4.16 and 3.27, definitely a see-saw battle.
But the important news is that while the mortgage rates aren’t really settling in to a specific rate, they do appear to be within a definite range, with no major swings one way or the other and due to the holiday this week, one can expect quiet sessions in both the stock and bond markets as no major reports will be released on either Thursday, Thanksgiving, or Friday. But that doesn’t mean that rates won’t make any major moves at all next week, the first week in December.
The biggie will be the unemployment report for November, which will show both the unemployment rate as well as the number of new jobs reported. In October, while the rate increased slightly, pundits were surprised at the amount of jobs created in the prior month, notably in the face of the partial government shutdown when 220,000 new jobs found their way to the market.
That said, more and more emphasis has been on the ADP national unemployment report, a weekly report issued by the private payroll and human resource management firm, Automatic Data Processing, Inc. This monthly report will be released two days before the Census Bureau’s Unemployment Report for November. If the job numbers appear as strong or stronger than the October count, you can expect mortgage rates to take a jump next Wednesday. And if the Friday report comes out even stronger, it’s possible that 30 year rates could reach into the upper 4.00 percent mark. If however the numbers are rather benign, mortgage rates should remain within their current range for the next couple of weeks.
Harp Loan Eligibility: Freddie Mac and Fannie Mae have accepted modifications to the HARP (Home Affordable Refinance Program) and you may be eligible to benefit from the HARP Loan Program if your home mortgage is guaranteed or owned by Freddie Mac or Fannie Mae. To check to see if your mortgage qualifies for the Harp loan program please visit: www.fanniemae.com and/or www.freddiemac.com. Verify your eligibility now by getting a free HARP loan program quote with MortgageRefinanceRates.org.