Notes From The Fed Suggests Higher Mortgage Rates In 2012

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via: TheMortgageReports.com/Dan Green

The Fed Funds Rate may hold near zero for some time, but that's not to say that mortgage rates will. The Federal Reserve projects an improving U.S. economy and long-term global growth -- two typical catalysts for mortgage rate increase.

Mortgage rates may never be as low as they are right now.

The Fed Make U.S. Monetary Policy

The Federal Reserve recently released the minutes from its January 2012 meeting. 15 pages in length and loaded with charts, the Fed Minutes detail the intra-Fed debates that shape our nation's monetary policy.

Fed Minutes receive less attention than the FOMC's post-meeting press release but have every bit as much import -- especially to today's mortgage rate shoppers. This is because mortgage rates are based, in part, on future economic expectations and the Federal Reserve provides excellent insight.

It helps that the Fed gets final say on monetary policy, too.

When the Fed thinks the economy is expanding too rapidly, it takes steps to slow growth. Conversely, when the Fed thinks the economy needs a macro-economic boost, it takes steps to stimulate. An astute rate shopper can use the text of the Fed Minutes to make better "float or lock" decisions.

"Lock" is the signal that's coming from the Fed.

Some Fed Members Concerned For Inflation

The January Fed Minutes revealed Fed members is disagreement on future monetary policy.

Some Fed members favored new, immediate market stimulus in the form of quantitative easing. QE2 has been accepted as a successful Fed intervention so talk of QE3 has emerged.

The Fed has hinted recently that ongoing weak employment data would trigger a QE3-like program. However, employment seems to be turning a corner (along with the rest of the economy). 243,000 net new jobs were added in January and small business plans to make more hires through 2012.

This is partly why other Fed members argued to terminate stimulus already in place.

The Fed's discussed were focused on inflation. The cumulative effect of the Fed's economic stimulus since 2007 and its near-zero Fed Funds Rate policy have the economy trudging forward like a truck in mud, tires spinning quickly. At some point, those tires will grab land and jolt the economic truck forward.

When that happens, the potential for runaway inflation is huge.

Ultimately, the Fed voted to neither add new stimulus nor remove that which already exists.

 

Mortgage Rates Move Higher With Inflation

The Fed Minutes painted an even picture of the U.S. economy. Growth is coming, but slowly. Threats exist, but they're moderating. A recovery is underway, but not as quickly as hoped.

In short, the U.S. economy is moving forward one step at a time; re-building its foundation for long-term strength. This is good for homeowners who want higher home values, and for active employees who want higher wages. However, a higher Cost of Living is coming and, when it hits, mortgage rates will rise.

If you're shopping for a mortgage, consider that the best rates of the year may be the ones you get right now. By summer, the recovery may too far along for rates to be low.

Low Mortgage Rates Push Housing Toward Bull Market Territory

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via: TheMortgageReports.com/Dan Green

As home supplies fall nationwide, buyers find themselves in a quandary. Mortgage rates are low and low-downpayment programs plentiful. However, there's very little housing stock from which to choose.

Competition for homes is heating up. The Buyers' Market is ending.

Home Supply Down 51% In 18 Months

According to the National Association of REALTORS®, Existing Home Sales rose to 4.57 million units last month on a seasonally-adjusted, annualized basis. This represents a 4 percent increase from December's revised figures and puts the benchmark figure at a 20-month high.

Not since May 2010 -- at the tail-end of the federal home buyer tax credit program -- have so many existing homes sold in a month. An "existing home" is a home that's been previously occupied and is not new construction.

Beyond the headline stats, though, there's a lot about which today's sellers should be excited -- beginning with the national home inventory.

With just 2.31 million homes for sale nationwide, the national housing stock is at a 5-year low and falling fast, down 21% from just a year ago. Furthermore, with low mortgage rates and an improving economy stoking U.S. buyers into action, at the current sales pace, the complete U.S. home inventory would be depleted just 6.1 months from now.

That's more than twice as fast as compared to July 2010.

Furthermore, analysts say a 6-month supply represents a market "in balance". Anything less is considered Bull Market territory and we're headed there shortly.

First-Time Buyers Support Long-Term Growth

The Existing Home Sales report showed other important notes, too.

First, it was noted that for the third straight month, 33% of purchase contracts "failed". A failure occurs when a buyer and seller agree on terms for a home, but never reach a settlement date.

Contract failures can occur for a multitude of reasons including major home inspection issues; appraisals failing to support a purchase price; and, mortgage turndowns for some reason or the other. They're also more common than ever before.

Last January, just 9 percent of contracts failed.

That said, there are lot of buyers still closing on their home and first-time buyers make up a growing share of them -- a good sign for the housing market overall.

In January 2012, home buyers were split by "type" as follows :

• First-Time Buyers : 33 percent of all home buyers
• Repeat Buyers : 46 percent of all home buyers
• Real Estate Investors : 23 percent of all home buyers

In addition, 35 percent of all January's existing home sales were distressed. That is, they were either a foreclosure or a short sale.

This is all good news for the housing market. First-time buyers can provide a market floor, buying entry-level homes which frees prior owner to "move-up". This is especially important in our improving economy. Large groups of would-be sellers have been "stuck" since 2009. With more buyers in the market, the chance to make a move -- either to accomodate a growing family or take a new job in a new city -- grows.

The abundance of no-downpayment and low-downpayment mortgage programs helps, too. The FHA's 3.5% downpayment has been a boon for mortgage markets, as has the VA's 100% mortgage program for military persons and the USDA's 100% mortgage program for homes in suburban and rural areas.

Get A Mortgage Rate On A Low-Downpayment Loan

You don't have to be a first-time home buyer to get a low-downpayment or no-downpayment loan. Move-up buyers get them, too. And with mortgage rates still low, there are some great, long-term deals out there. If only there were more great homes for sale!

Check your budget. What can you comfortable afford to spend on housing each month? Do the math with today's mortgage rates, too. There's no substitute for the real thing.

The Tax Benefits of Refinancing

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via: SmartMoney.com/Bill Bischoff

Bischoff: If you refinanced your mortgage in 2011, make sure you get all your rightful tax breaks

Many people refinanced their mortgages in 2011 to take advantage of super-low interest rates.

If you refinanced last year, here's how to make sure you claim all your rightful deductions on your 2011 return.

Deducting Your Mortgage Interest

Say your original mortgage was $200,000. On July 1, 2011, you took out a new 30-year, $300,000 mortgage and paid 1 1/2 points, or $4,500, for the privilege. (Each point represents 1% of your total loan amount.) You then used the extra $100,000 from the new mortgage to eliminate some high-interest credit-card bills, pay off your car loans and cover various other expenses.

Assuming your home was worth at least $300,000 when you refinanced, you have, in effect, two new mortgages as far as the Internal Revenue Service is concerned. The first $200,000 of your new loan (the balance on your old mortgage when you paid it off) is treated as "home-acquisition debt." And the interest on this qualifies as an itemized deduction on line 10 of your Schedule A.

The remaining $100,000 of your new loan is treated as home-equity debt. The interest on this should also qualify as an itemized deduction on line 10 of your Schedule A. But keep one thing in mind: The IRS only recognizes home-equity loans up to $100,000; you can't deduct the interest paid on principal above that figure.

Also, if the home-acquisition debt plus the home-equity debt exceeded the fair-market value of your home, you generally can't deduct the interest on the excess debt. Say your home was worth $240,000 when you took out that new $300,000 loan. You can deduct the interest on the $200,000 of acquisition debt. However, for the home equity debt, you can only deduct the interest on $40,000. So you can deduct 80% ($240,000/$300,000) of the total mortgage interest on line 10 of your Schedule A. (The interest on the remaining $60,000 of debt is generally considered a nondeductible personal expense, though there are a couple of exceptions, like if you used the loan proceeds to finance your small business.)

Talking Points

You can also amortize the points related to the home-acquisition-debt part of the new loan ($3,000 in our example) over the life of the loan. Say it's a 30-year loan (360 months). Your amortization deduction would be $8.33 a month ($3,000 divided by 360), for a grand total of $99.96 a year. Every little bit helps, right?

What about the points related to the home-equity debt ($1,500 in our example)? You can amortize those in the same proportion as the interest, provided that the home-equity debt is $100,000 or less, and the home's value isn't less than the home-equity debt plus the acquisition debt. Claim the amortization write-off for your home-mortgage points on line 10 or 12 of Schedule A.

This brings us to our last potential deduction. If you previously refinanced your mortgage and paid points, you probably have a good-sized unamortized (or not-yet-deducted) balance for those points. You can generally deduct that entire unamortized amount when you refinance again. For example, say the mortgage you refinanced last year was taken out in a previous refinancing deal done six years earlier, back in 2005. At that time you paid $2,000 in points for your 30-year loan. You should have $1,600 worth of unamortized points left over from the 2005 loan (80% of the original $2,000 amount). On your 2011 return, don't forget to deduct the $1,600 of unamortized points. Claim your write-off on line 12 of Schedule A.

New home construction starts strong in 2012

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via: CNNMoney.com

New home construction got off to a strong start for the year, with housing starts and building permits rising in January on a monthly and annual basis -- another sign that the U.S. housing market and broader economy are headed in the right direction.

The Census Bureau reported that housing starts rose to an annual rate of 699,000, up 1.5% from December. Compared to a year ago, housing starts were almost 10% higher.

Building permits, which are less affected by weather than starts, came in at a 676,000 annual rate in January, up 0.7% from the prior month and 19% from a year earlier.

Results were also better than industry expectations. A consensus of industry experts from Briefing.com had forecast starts of 671,000 and permits of 675,000.

Housing completions fell to an annual rate of 530,000 in January, however, a drop of 12% compared to December, but up more than 4% from a year earlier.

"Along with the overall positive tides seen recently in the economy, it looks as if residential building is starting to follow suit," said Mike Lubansky, senior financial analyst at Sageworks. "Although residential building still has a steep hill to climb in order to achieve a full recovery to pre-2007 levels, it does look to be on the right trajectory."

For a full-blown recovery, experts say good news needs to continue out of the job market. So far, the unemployment rate has dropped for five straight months, and now stands at 8.3%, the lowest since February 2009.

Initial claims for unemployment benefits have also been falling. On Thursday, a government report showed that the number of Americans filing for jobless claims plunged to the lowest level in nearly four years.

"Today's data are further proof that the recovery solidified in late 2011, and that momentum has carried forward into 2012," said Gus Faucher, senior economist at PNC Financial Services Group. "More importantly, the likelihood of an even stronger recovery is growing."

He added that a continued pick-up in job growth this year could support faster consumer spending growth and a stronger rebound in housing. But, he added, the financial crisis in Europe remains the largest downside risk.

Rates Stay Low, With 30-Year Fixed Below 4 Percent

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via: DSNews.com

The average 30-year fixed-rate mortgage is still at an all-time low of 3.87 percent, and it’s been there since the first week of February, according to the Primary Mortgage Market Survey released by Freddie Mac.

The 30-year average has also managed to remain below 4 percent for the past 11 weeks, and below 5 percent for the past 52 weeks dating back to February 17, 2011, according to the survey.

The 15-year rate this week averaged at 3.16 percent (0.8 point), maintaining the same average as last week. The15-year rate averaged 4.27 percent a year ago at this time.

The 5-year adjustable-rate mortgage (ARM) averaged 2.82 percent this week (0.8 point), down from last week when it averaged 2.83 percent, and down a year ago when it averaged 3.87 percent.

The 1-year ARM averaged 2.84 percent this week (0.6 point), an increase compared to 2.78 percent last week. The 1-year ARM averaged 3.39 percent at this time last year.

Frank Nothaft, vice president and chief economist for Freddie Mac, said amidst mixed confidence, mortgages rates were unchanged.

“Small business confidence ticked up slightly in January, representing a fourth consecutive month gain, according to the National Federation of Independent Business index. However, the Reuters/University of Michigan index of consumer sentiment fell in February by more than the market consensus forecast, breaking a five month trend,” Nothaft said. “In the meantime, home builder confidence rose in February to the highest reading since May 2007, based on the NAHB/Wells Fargo Housing Market Index.”

Surging Homebuilder Confidence Puts Home Buyers On The Clock

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via: TheMortgageReports.com/Dan Green

Close your papers, turn off your TVs, and ignore the talking heads. If you really want to know in which direction housing is headed, talk to the guys on the street; the guys on the front-line; the ones that make the business.

No one knows housing like homebuilders and builders say 2012 will be blowout.

Homebuilder Confidence Returns To Pre-Recession Levels

The housing economy is mending. The combination of low mortgage rates, low downpayment programs, and pent-up demand for homes has buyers out shopping in droves. Demand for new home construction has climbed sharply.

Markets like Washington, D.C. suburb Loudoun County (Virginia) and Bucks County, Pennsylvania mirror other big markets -- new construction is in demand.

It's not surprisingly, therefore, that for the sixth straight month, the National Association of Homebuilders reports homebuilder confidence is on the rise. The Housing Market Index climbed four points to 29 in February, the index's highest reading since May 2007.

The Housing Market Index is now up 8 points since December, its strongest two-month run since June 2003, the month that sparked a 4-year bull market in housing, stocks and commodities.

We're at a similar inflexion point now.

Builders : "Foot Traffic Has Doubled Since September"

There's a lot of evidence that the housing market is mending. Existing home sales are up. More homes are under contract. Things even "feel different" -- just ask a friend who's shopped for a home this year. You'll hear stories of competing offers and "great homes" that sold in a week.

You didn't hear that stuff six months ago and it's this particular zeitgeist that the National Association of Homebuilders' Housing Market Index attempts to measure.

In its simple, 3-question survey, the NAHB ask its members about their respective businesses, and what they seeing "on the street". The NAHB then compiles those answers into a weighted survey result called the Housing Market Index.

The Housing Market Index questions are :

1. How are market conditions for the sale of new homes today?
2. How are market conditions for the sale of new homes in 6 months?
3. How is prospective buyer foot traffic?

In February, the nation's builders reported improvement in all three areas. Current home sales climbed 5 points from the month prior; sales expectations for the next 6 months climbed 5 points from the month prior; and buyer foot traffic moved higher again, marking 6 straight months of improvement.

There are now twice as many buyers touring models as there was in September 2011. Clearly, interest in new homes is rising.

Demand For Homes Rising, Inventory Shrinking

The housing market is in an interesting place. The economy is clearly heating up, led by jobs and consumer spending. Meanwhile, there's still stimulus still working its way through the market.

Home prices remain low and so do mortgage rates. Home affordability has never been better. As a result, in many U.S. housing markets, today's buyers have a ground-floor opportunity to buy a home. Lock a long-term rate on an inexpensive home -- it's the ultimate "Buy Low" scenario.

It can't last, of course. And it won't. Builders see what's coming and they're confident for 2012. To buyers it means higher prices, fewer concessions and a tight negotiation. Your best "deals" of the year may be the ones you buy now. In 60 days, it may be too late.

HARP Program : The Complete HARP II Eligibility Requirements

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via: TheMortgageReports.com/Dan Green

UPDATE (February 15, 2012) : The government announced changes to its HARP program November 15, 2011. This post is accurate and up-to-date. Click here to get a HARP refinance rate quote.

If you're underwater on your conforming, conventional mortgage, you may be eligible to refinance without paying down principal and without having to pay mortgage insurance.

Here are the details of the government's new 2011 HARP refinance program.

Get a HARP refi quote now.

What Is HARP?

HARP was started in April 2009. It goes by several names. The government calls it HARP, as in Home Affordable Refinance Program.

The program is also known as the Making Home Affordable plan, the Obama Refi plan, DU Refi +, and Relief Refinance.

In order to be eligible for the HARP refinance program :

1. Your loan must be backed by Fannie Mae or Freddie Mac.
2. Your current mortgage must have a securitization date prior to June 1, 2009

If you meet these two criteria, you may be HARP-eligible. If your mortgage is FHA, USDA or a jumbo mortgage, you are not HARP-eligible.

HARP : Questions and Answers

Do these question-and-answers account for the "new" HARP mortgage program?

Yes, everything you are reading is accurate as of today, February 15, 2012. This post includes the latest changes as rolled out by the Federal Home Finance Agency on October 24, 2011, and as confirmed by Fannie Mae and Freddie Mac on November 15, 2011.

Is "HARP" the same thing as the government's "Making Home Affordable" program?

Yes, the names HARP and Making Home Affordable are interchangeable.

How do I know if Fannie Mae or Freddie Mac has my mortgage?

Fannie Mae and Freddie Mac have "lookup" forms on their respective websites. Check Fannie Mae's first because Fannie Mae's market share is larger. If no match is found, then check Freddie Mac. Your loan must appear on one of these two sites to be eligible for HARP.

If my mortgage is held by Fannie Mae or Freddie Mac, am I instantly-eligible for the Home Affordable Refinance Program?

No. There is a series of criteria. Having your mortgage held by Fannie or Freddie is just a pre-qualifier.

My mortgage is held by Fannie/Freddie. Now what do I do?

Find a recent mortgage statement and write "Fannie Mae" or "Freddie Mac" on it -- whichever group backs your home loan -- so you don't forget. Give that information to your lender when you apply for your HARP refinance. Click here for a HARP rate quote.

My mortgage is backed by Wells Fargo. Am I eligible for HARP?

It's possible that your mortgage is backed by Wells Fargo, but the more likely answer is that Wells Fargo is just your mortgage servicer; the bank that collects your payments. Wells Fargo backs very few of its own loans. Most loans for which payments are sent to Wells Fargo are backed by either Fannie Mae or Freddie Mac. Double-check with Fannie Mae and Freddie Mac before assuming Wells Fargo backs your loan.

My mortgage is backed by Bank of America. Am I eligible for HARP?

Bank of America does back some of its own loans, but the more likely answer is that Bank of America is your mortgage servicer; the bank that collects your monthly mortgage payments. Bank of America backs very few of its own loans. For most loans for which payments are sent to Bank of America, Fannie Mae or Freddie Mac are the actual loan-backers. Double-check with Fannie Mae and Freddie Mac to make sure Bank of America doesn't hold your loan.

My mortgage is backed by Chase. Am I eligible for HARP?

There is a chance that Chase backs your loan, but what's more likely is that Chase is just your mortgage servicer; the bank that collects your payments each month. Chase backs very few of its own loans. For most loans for which payments are sent to Chase, you'll find that Fannie Mae or Freddie Mac are the actual loan-backers. Double-check with Fannie Mae's and Freddie Mac's websites to make sure your loan is not held by Chase.

What if neither Fannie Mae nor Freddie Mac has a record of my mortgage?

If neither Fannie nor Freddie has record of your mortgage, your loan is HARP-ineligible. However, you may still be eligible for a "regular" refinance to lower rates. Use this form to get a rate quote to see your options. Or, if your mortgage is insured by the FHA, use the FHA Streamline Refinance program. The FHA Streamline Refinance helps underwater homeowners, too.

Does HARP work the same with Fannie Mae as with Freddie Mac?

Yes, for the most part, the HARP mortgage program is the same with Fannie Mae as with Freddie Mac. There are some small differences, but they affect just a tiny, tiny portion of the general population. For everyone else, the guidelines work the same.

Am I eligible for the Home Affordable Refinance Program if I'm behind on my mortgage?

No. You must be current on your mortgage to refinance via HARP.

What are the HARP program's mortgage rates?

Mortgage rates for the HARP mortgage program are the same as for a "traditional" refinance. There is no "premium" for using the HARP program.

Will the Home Affordable Refinance Program help me avoid foreclosure?

No. The Home Affordable Refinance Program is not designed to delay, or stop, foreclosures. It's meant to give homeowners who are current on their mortgages, and who have lost home equity, a chance to refinance at today's low mortgage rates.

What are the minimum requirements to be HARP-eligible?

First, your home loan must be paid on-time for the prior 6 months, and at least 11 of the most recent 12 months. Second, your mortgage must have been sold to Fannie or Freddie prior to June 1, 2009. And, third, you may not have used the HARP mortgage program before -- only one HARP refinance per mortgage is allowed.

My mortgage was securitized shortly after the HARP deadline of May 31, 2009. Can I get a waiver or exception?

No, there are no "date exceptions" for HARP. If your loan was not securitized on, or before, May 31, 2009, you cannot use HARP.

If I refinanced with HARP a few years ago, can I use it again for HARP II?

No. You can only use the HARP mortgage program one time per home.

I refinanced into a HARP loan a few years ago, but my bank never told me it was a HARP loan. I feel like I was lied to. Can I use HARP again under the HARP II program?

No. You can only use the HARP mortgage program one time per home.

Is there a loan-to-value restriction for HARP?

No. All homes -- regardless of how far underwater they are -- are eligible for the HARP program. Click here for a HARP rate quote.

I am really far underwater on my mortgage. Can I use HARP?

Yes, you can. There is no loan-to-value restriction under the HARP mortgage program so long as your new mortgage is a fixed rate loan with a term of 30 years or fewer. If you use an adjustable-rate mortgage, your loan-to-value is capped at 105%.

Maybe I wasn't clear. I am really, really far underwater on my mortgage. Are you sure I can use HARP?

Yes, I am sure. The new HARP mortgage program specifically has no loan-to-value restriction so that homeowners in Florida, California, Arizona and Nevada can take advantage of it. You can 300% loan-to-value, and still be HARP-eligible. HARP is now unlimited LTV for fixed rate loans with 30-year terms or less.

If I refinance with HARP using an ARM, do I still get "unlimited LTV"?

No, if you use an ARM for HARP, you are limited to 105% loan-to-value. Only fixed rate loans get the unlimited LTV treatment.

Will my home require an appraisal with the HARP mortgage program?

Sort of. Although your home's value doesn't matter for the HARP mortgage program, lenders will run what's called an "automated valuation model" (AVM) on your home. If the value meets reliability standards, no physical appraisal will be required. However, your lender may choose to commission a physical appraisal anyway -- just to make sure your home is "standing".

Is HARP the same thing as an FHA Streamline Refinance?

No, the HARP mortgage program is administered through Fannie Mae and Freddie Mac. FHA Streamline Refinances are performed through the FHA. The programs have similarities, however.

I have an FHA mortgage. Can I use the HARP 2.0 program?

No, you cannot use the HARP 2.0 program for an FHA loan. If your current mortgage is backed by the FHA, and your home is underwater, use the FHA Streamline Refinance program. Click here to read about the FHA Streamline Refinance program.

I have a USDA mortgage. Can I use the HARP 2.0 program?

No, you cannot use the HARP 2.0 program for a USDA loan. If your current mortgage is backed by the USDA, and your home is underwater, use the USDA's Refinance program. Click here to get USDA mortgage rates.

I have a VA mortgage. Can I use the HARP 2.0 program?

No, you cannot use the HARP 2.0 program for a VA loan. If your current mortgage is backed by the VA, and your home is underwater, use the VA's IRRRL program. Click here to get VA mortgage rates.

Does Ginnie Mae participate in the HARP Refinance program?

No, Ginnie Mae does not participate in the HARP Refinance program. Ginnie Mae is associated with FHA mortgages -- not conventional ones. HARP II is for conventional mortgages only.

Do I have to HARP refinance with my current mortgage lender?

No, you can do a HARP refinance with any participating mortgage lender.

So, I can use any mortgage lender for my HARP Refinance?

Yes. With the Home Affordable Refinance Program, you can refinance with any participating HARP lender. Click here for a HARP rate quote.

My current bank says that they're the only ones who can do my HARP Refinance. Is that true?

No, that's not true. Or, at least it shouldn't be. There are very few instances in which a HARP applicant will be precluded from shopping for the best rate. It's doubtful that your situation is one of them.

My current mortgage is with [YOUR BANK HERE] and I don't like them. Can I work with another bank?

Yes, with HARP, you can work with any participating lender in the country. Click here for a HARP rate quote.

I put down 20% when I bought my home. My home is now underwater. If I refinance with HARP, will I have to pay mortgage insurance now?

No, you won't need to pay mortgage insurance. If your current loan doesn't require PMI, your new loan won't require it, either.

I pay PMI now. Will my PMI payments go up with a new HARP refinance?

No, your private mortgage insurance payments will not increase. However, the "transfer" of your mortgage insurance policy may require an extra step. Remind your lender that you're paying PMI to help the refinance process move more smoothly.

My bank says I can't refinance with HARP 2.0 because I have PMI. Is that true?

No, it's not true. You can refinance via HARP 2.0 even if your current mortgage has private mortgage insurance.

Why does my loan officer tell me I can't refinance with HARP because my current mortgage has PMI?

The new HARP program is exactly that -- new. There are new rules and guidelines and not every bank is up-to-speed on what's going on. If you're hearing that you can't refinance your current mortgage because it has PMI on it, that's a signal that you're working with sub-optimal loan officer. You may want to shop around. Click here for a HARP rate quote.

My current mortgage has Lender-Paid Mortgage Insurance (LPMI). Can I refinance via HARP?

Yes, you can refinance your mortgage via HARP 2.0 if your current loan has lender-paid mortgage insurance (LPMI). It's your loan officer's responsibility to make sure that your new mortgage carries, at minimum, the same amount of coverage.

I have no idea what that means. How do I choose my PMI "coverage" when I refinance a HARP loan that has LPMI?

Don't worry about it. Your loan officer will know what to do. Just make sure you disclose that your mortgage has LPMI so the bank knows what to do. Otherwise, your loan could be delayed in processing. Click here to get a HARP rate quote.

How do I know if my mortgage has Lender-Paid Mortgage Insurance (LPMI)?

To find out if your mortgage has lender-paid mortgage insurance (LPMI), locate your loan paperwork from closing. There should be a clear disclosure that states that your mortgage features LPMI, and the terms should be clearly labeled for you.

I don't see an LPMI disclosure in my closing package but I think that I have it. How do I know if my mortgage has LPMI?

If there is no LPMI disclosure, first check if your first mortgage's loan-to-value exceeded 80% at the time of closing. If it did, look to see if you are paying monthly mortgage insurance. If you are not paying monthly PMI, you're likely carrying LPMI.

What's the bottom line with HARP refinances and mortgage insurance?

With HARP, regardless of whether you have borrower-paid mortgage insurance (BPMI) or lender-paid mortgage insurance (LPMI), a refinance is possible. The key is that the new loan has mortgage insurance coverage at least equal to the mortgage insurance coverage on your current mortgage.

What if my lender won't give me a HARP refinance because I have mortgage insurance?

Find a new lender. There are plenty that can help you. Click here for a HARP rate quote.

What's the biggest mortgage I can get with a HARP refinance?

HARP refinances are limited to your area's conforming loan limits. In most cities, the conforming loan limit is $417,000. However, there are some cities in which conforming loan limits are as high at $625,500.  You can lookup your area's conforming loan limits by clicking here.

Can I do a cash-out refinances with HARP?

No, the HARP mortgage program doesn't allow cash out refinance. Only rate-and-term refinances are allowable.

Can I refinance a second/vacation home with HARP?

Yes, you can refinance an second/vacation property with HARP, even if the home was once your primary residence. The loan must meet typical program eligibility standards.

Can I refinance an investment/rental property with HARP?

Yes, you can refinance an investment/rental property with HARP, even if the home was once your primary residence. You can refinance a home on which you're an "accidental landlord" via HARP. The loan must meet typical program eligibility standards.

I rent out my old home. Is it HARP-eligible even though it's an investment property now?

Yes, you can use the HARP Refinance program for your former residence -- even if there's a renter there now.

How long do I have to stay in my house if I use HARP on my primary residence?

There is no specific timeframe for which you're required to stay in your home if you use HARP 2.0. Just like any other mortgage, if you plan to stay in your home post-closing, it's your primary residence. If you plan to turn it into a rental, it's an investment property. Click here to see today's HARP mortgage rates.

These things I'm reading here... Why, when I call my bank, do they tell me it's not true?

It's possible that the call center representative to whom you're speaking is neither knowledgeable about HARP, nor the actual mortgage underwriting process. This post is researched and cross-referenced against Fannie Mae and Freddie Mac guidelines, and publicly-available reports from the FHFA.

Are condominiums eligible for HARP refinancing?

Yes, condominiums can be financed on the HARP refinance program. Warrantability standards still apply.

Can I consolidate mortgages with a HARP refinance?

No, you cannot consolidate multiple mortgages with the HARP refinance program. It's for first liens only. All subordinate/junior liens must be resubordinated to the new first mortgage.

What happens to my second mortgage when I refinance my first mortgage using HARP 2.0?

HARP 2.0 is meant for first liens only. Second liens are meant to subordinate. You'll get to replace your first mortgage and your second mortgage will remain as-is. Just be sure to mention your second mortgage at the time of application so your lender knows to order the subordination for you.

My second mortgage isn't backed by Fannie Mae or Freddie Mac. Is that a problem?

No, it doesn't matter if your second mortgage isn't backed by Fannie Mae or Freddie Mac. Second mortgages are ignored as part of HARP. They can't be refinanced, and they can't be consolidated. Second mortgages are a non-factor in HARP 2.0.

My bank is not setup for HARP and I want to refinance. What do I do?

If your current bank is not setup for HARP, find a new lender. HARP is available through any participating bank (and there are a lot of them). Click here for a HARP rate quote.

Can I "roll up" my closing costs with a HARP refinance?

Yes, mortgage balances can be increased to cover closing costs in addition to other monies due at closing such as escrow reserves, accrued daily interest, and a small amount of cash.  In no cases may loan sizes exceed the local conforming loan limits, however.

I am unemployed and without income. Am I HARP-eligible?

Yes, you do not need to be employed to use the HARP mortgage program. HARP applicants do not need to be "requalified" unless their new principal + interest payment increases by more than 20%. If the new payment increases by less than 20%, or falls, there is no requalification necessary.

My original mortgage was a stated income loan. Will my income be verified with a HARP refinance?

No, your income will not be verified via the HARP refinance program unless your new principal + interest payment increases by more than 20 percent. If your new principal + interest payment increases by less than 20%, or falls, there is no income verification necessary.

What is the maximum income that a HARP applicant is allowed?

The HARP refinance program has no maximum income limits. You cannot "earn too much" to qualify. Click here to get a HARP rate quote.

So, I can't earn too much money to use HARP 2.0?

No, there are no income restrictions for the Home Affordable Refinance Program (HARP). A similar-sounding program, though -- Home Affordable Modification Program (HAMP) does have income limitations. Many people confuse the two.

Is HARP the same thing as HAMP?

No. HARP stands for Home Affordable Refinance Program. HAMP stands for Home Affordable Modification Program. Both programs are supported by the Making Home Affordable initiative, but that's about where the similarities end.

I am now divorced. I want to remove my ex-spouse from the mortgage. Can I do that with HARP?

Yes. With HARP, a borrower on the mortgage can be removed via a HARP refinance so long as that person is also removed from the deed; and has no ownership interest in the home. Click here for a HARP rate quote.

Do HARP refinances use Loan-Level Pricing Adjustments (LLPAs)?

Yes, HARP mortgages use loan-level pricing adjustments, but LLPAs are dramatically reduced on a HARP refinance and, in some cases, waived entirely. For example, there are no LLPAs for fixed-rare HARP refinances with terms of 20 years or fewer. For all other loans, loan-level pricing adjustments are capped at 0.75 points.

Does a HARP Refinances require LLPAs for a 15-year fixed rate mortgage?

No, there are no LLPAs for 15-year fixed rate mortgage via the HARP Refinance program.

Is there a minimum credit score to use the HARP program?

No, there is no minimum credit score requirement with the HARP mortgage program, per se. However, you must qualify for the mortgage based on traditional underwriting standards.

Do I have to refinance my mortgage with my current lender?

No, you can do a HARP refinance with any participating lender you want. Click here for a HARP rate quote.

My current lender tells me that if I want to do a HARP refinance, I have to go through him. Is that true?

No, it's not true that you can't shop for the lowest HARP refinance rates available. You are allowed to do a HARP refinance with any HARP-participating lender.

My bank called me for a HARP refinance. The rate seems high. Should I shop around?

Yes, it's always a good idea to shop for the best combination of mortgage rates and loan fees. However, be sure to shop with reputable lenders that have experience underwriting and approving HARP mortgages. HARP 2.0 is a new refinance program and not many banks have expertise with them. You don't want to have your loan approval fall apart because your lender failed to underwrite to HARP mortgage standards.

Where can I get the lowest rates on HARP loans?

The HARP program is just like any other mortgage -- you'll want to shop around for the best rates and service. However, because HARP is a "specialty loan", you may want to limit your shopping with reputable lenders that know how to specifically handle HARP loans. Click here to see HARP mortgage rates.

What are the costs to refinance via the HARP program?

Closing costs for HARP refinances should be no different than for any other mortgage. You may pay points, you may pay closing costs, you may pay neither. How your mortgage rate and loan fees are structured is between you and your loan officer. You can even opt for a zero-cost HARP refinance. Ask your loan officer about it.

What does the term "DU Refi Plus" mean?

"DU Refi Plus" is the brand name Fannie Mae assigned to its particular flavor of the HARP mortgage program. "DU" stands for Desktop Underwriter. It's a software program that simulates mortgage underwriting. "Refi Plus" is a gimmicky-sounding term that could have been anything. The name has been trademarked, however.

What does the term "Relief Refinance" mean?

"Relief Refinance" is the Freddie Mac equivalent of DU Refi+.

For how long should I lock my mortgage rate via the HARP Program

Lock for 45 days, at minimum. This is because the HARP mortgage program, while streamlined for simplicity, still has some grey areas that can lead to delay. It's better to have a rate lock that lasts too long than not long enough.

When does the HARP program end?

If you are HARP-eligible, you must close on your mortgage prior to January 1, 2014 --days from now.

How do I apply for the HARP program?

Use this form to get a rate quote. If the rate looks good, you can accept it. There is no fee for applying.

Apply For Home Affordable Refinance Program

When you're ready to see mortgage rates, click here for a free HARP rate quote.

Lastly, don't forget! The Home Affordable Refinance Program is not meant to save a home from foreclosure. It's meant to give underwater homeowners a chance to refinance without paying PMI. If you need foreclosure help, call your current loan servicer immediately.

Plunging Mortgage Rates Lower Mortgage Payments 13% In One Year

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via: TheMortgageReports.com/Dan Green

So, how big is your mortgage payment? No matter how new or old your home loan is, there's a good chance you could save money with a refinance to today's low mortgage rates. FHA mortgage rates, VA mortgage rates, USDA mortgage rates and mortgage rates via Fannie Mae and Freddie Mac continue to plunge.

Even jumbo mortgage rates have made new lows. It's time to refinance.

Mortgage Rates Under 4%

Since 2008, aggressive Fed policy and a weak global economy have combined to push mortgage rates to previously-inconceivable levels. For borrowers willing to pay closing costs, most mortgage products have sub-4 percent options available.

By comparison, just 4 years ago, mortgage rates were in the 7s (and we were happy about it).

Heck, even last year, conventional mortgage rates were much higher than they are today.

In February 2011, after a big run-up, the 30-year fixed rate mortgage rate averaged 5.05% nationwide. At the time, analysts predicted that mortgage rates would move higher; housing experts predicted that home values would stabilize; and economists predicted strong domestic growth within the United States.

Two of the 3 were right.

The housing market leveled off and, in many markets, its recovery is apparent. The U.S. economy has added close to 2 million jobs and appears to be surer footing. Mortgage rates, though, in places like Fairfax County, Virginia; Chicago, Illinois; and San Jose, California have done nothing but drop. Precipitously.

According to Freddie Mac's weekly mortgage, the average 30-year fixed rate mortgage is now at 3.87% for borrowers willing to pay the accompanying 0.8 discount points plus closing costs.

Get A 13% Reduction In Your Mortgage Payment

For homeowners and home buyers with a long-term housing plan, today's mortgage rates are an incredible value as compared to even February of last year.

Last February, the 30-year fixed rate mortgage averaged 5.05 percent nationwide. If you're among the many U.S. households that bought or refinanced a home around that time, refinancing to today's rates at 3.87 percent would lower your mortgage payment by 13%.

Saving 13% saved on your mortgage payment is huge. Take a look at the math :

• February 2011 : $539.88 principal + interest for every $100,000 borrowed
• February 2012 : $469.95 principal + interest for every $100,000 borrowed

That's $69.93 monthly savings for every $100,000 borrowed. Mapping this to a real-life mortgage, then, a homeowner in San Diego borrowing at the local conforming limit of $625,500 would recognize savings of $437 per month just for doing a refinance -- or $5,245 per year.

The "break-even point" on a mortgage like that comes relatively quickly -- even after accounting for discount points and closing costs.

Mortgage rates have never been this low in history.

See How Much You Can Save With A Refinance

Mortgage rates can't be predicted so there's no promise that mortgage rates will stay low like this forever. In fact, there's mounting evidence that mortgage rates will rise in 2012.

If you plan to buy or home with low downpayment or with a big downpayment; or have plans to refinance this year, the longer you wait, the less likely it is that you'll get the great, low rates that today's mortgage applicants are getting.

You have to see today's rates to believe them.

FHA Streamline Refinance Changes : Banks To Stop Verifying Income, Job, And Credit

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via: TheMortgageReports.com/Dan Green

The FHA wants to see more homeowners qualify for the FHA Streamline Refinance so it's making a small rule change to make that happen.

With the change, FHA-backed homeowners will finally get access to the FHA Streamline Refinance as the program was intended -- no income verification, no employment verification, and no credit check.

Millions of FHA homeowners will get access to today's low FHA mortgage rates.

 

What Is An FHA Streamline Refinance?

The FHA Streamline Refinance is a special refinance program for people with FHA mortgages. It's a nearly paper-free refinance meant to sail through underwriting and get you to the closing table quickly.

FHA Streamline Refinances are open to homeowners in all 50 states. There are just 3 approval criteria :

1. Your must have made at least 6 payments on your current FHA mortgage.
2. You must not have made a late payment on your mortgage going back 12 months.
3. Your refinance must have "purpose" (i.e. lower rate; switch from ARM to fixed-rate)

Beyond that, the FHA Streamline Refinance is basic. There are no income verifications; no job verifications; no credit score verifications. There's no home appraisal needed, even.

The FHA Streamline Refinance is the original mortgage for "underwater homeowners".

With an FHA Streamline Refinance, your home can have 400% LTV or more and it doesn't matter to your loan approval -- your home's value is ignored completely, with no changes to rate or fees.

This is a huge benefit to FHA homeowners in places like Phoenix, Arizona; Sacramento, California; and Atlanta, Georgia where home values have dropped precipitously since 2005.

No matter where you live, so long as you meet the FHA's 3 basic requirements, you're FHA Streamline Refinance-eligible.

 

A No-Verification Mortgage That Lowers The FHA's Risk

On the surface, the whole concept of the FHA Streamline Refinance looks like a bad idea."Why would the FHA make a loan with absolutely no verification of any kind whatsoever?" people ask. "Isn't that a giant risk?"

The answer is "no". The FHA is actually reduce its risk by making these loans.

Remember : The key idea here is that the FHA doesn't actually make loans to homeowners. Rather, it insures the banks that make loans to homeowners. In this way, once a homeowners has his mortgage in the FHA's "system", so to speak, the FHA is on the hook for that loan no matter what its rate or loan size.

This is why FHA homeowners are not allowed to increase their loan balances with an FHA Streamline Refinance. Raising the loan size would raise the FHA's exposure to default.

This is why the FHA Streamline Refinance skips job, income and credit verifications. It really doesn't matter if someone lost their job; or has a 500 FICO -- the FHA is still on the hook for that loan.

It's in the FHA's best interest to put all FHA-backed homeowners into the lowest mortgage rates possible because with lower payments, in theory, come fewer defaults, which means fewer claims.

 

FHA Removes "Compare Ratios" To Help Homeowners

Although the FHA says it will accept streamline loans with no verifications, lenders have thus far ignored those instructions.

To date, lenders have not only verified income and employment, but they've put strict credit score requirements in place, too. Huge numbers of FHA-backed homeowners have been turned down for loans because of FICO scores under 640; or because of unemployment; or because of high debt-to-income ratios.

This is not what the FHA intended when it made the FHA Streamline Refinance guidelines.

Therefore, some changes are being made. Specifically, the FHA is changing how it calculates its Compare Ratios. Compare Ratios are a little-known part of the mortgage business, but paramount to the FHA Streamline Refinance process.

Simplified, a Compare Ratio is an FHA lender's loan default rate as compared to the default rate of other FHA lenders in the area.

For example, if an FHA lender in Virginia has a 6% default rate and 3% of all FHA loans in Virginia defaulted, then the FHA lender has a Compare Ratio of 200%.

The FHA uses Compare Ratios to determine which banks are making the most "bad loans".

 

In general, lenders with Compare Ratios over 150% are considered a risk to the FHA; those with Compare Ratios over 175% get put on notice; and those with Compare Ratios over 200% are often sanctioned and lose their ability to make FHA-insured mortgages in the future.

Until now, the FHA had included FHA Streamline Refinances in its Compare Ratios, leaving banks liable for loan performance on loans they may not have originally underwritten. Banks were reluctant to take on that risk because none want to be on the FHA's Watch List, nor do they want to face formal sanctions.

It also led to a never-ending game of One-Upmanship. Lenders would engage in FHA Streamline Refinances, but with an ever-escalating series of loan guidelines. For the banks, making FHA Streamline Refinances wasn't about making great FHA loans -- it was about making fewer bad FHA loans than the next guy.

This explains why banks did verify income; and did verify employment; and did institute minimum credit score standards -- even though the FHA said they didn't have to.

Banks didn't want their Compare Ratios to rise.

The FHA has acknowledged this issue and, similar to how HARP II waives reps and warrants on HARP refinances, the FHA will now exclude FHA Streamline Refinances from its Compare Ratio calculation. Banks are no longer penalized if they make an FHA Streamline Refinance loan that goes bad.

Literally overnight, getting approved for an FHA Streamline Refinance has become faster, easier and, for lack of a better word, more streamlined.

 

Turned Down For Your Streamline Refinance? Try Now!

Over the past 2 years, there have been hundreds of thousands of FHA-backed homeowners whose FHA Streamline Refinance application were denied in underwriting. Maybe yours is one of them.

Or, maybe you never applied because you were out of work; or your credit score was too low.

It's time to re-apply. FHA mortgage rates are low and the book on refinancing just opened up wide. Reserve your spot and get your rate. It's time to (finally!) drop that rate.

 

Mortgage Insurers Give Fannie Mae Permission To Speed Up Short Sale Timelines

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via: TheMortgageReports.com/Rob Chrisman

It is hard to pick up a newspaper without reading about short sales statistics, where borrowers owe more than the home is worth and, when it is sold, must have the lender accept the lower price. Short sales, which are often seen as a better alternative to foreclosure, till lag behind REO sales in numbers for Fannie Mae and Freddie Mac

With a short sale, typically, the mortgage servicer is contacted beforehand in order to give the okay for a short sale on properties secured with guaranteed loans, but it has been revealed Fannie Mae has been given the authority to proceed with a short sale or complete a deed in lieu of foreclosure by five mortgage insurers, without needing to secure their approval.

The latest mortgage insurer to give Fannie Mae the authority to proceed without waiting is the PMI Group, which only recently filed for bankruptcy last year.

PMI Group joins Genworth, Republic Mortgage Insurance Co., MGIC and Radian Guaranty in already granting authority to Fannie Mae. With less red tape to go through, Fannie Mae mortgage servicers should be able to step up the approval of short sales.

Buyers, Realtors, and mortgage bankers have all complained about the lengthy amount of time needed to complete a short sale. All of this fits with its wider plan to increase short sale completion rates and also boost the speed of the process. As part of these efforts, Fannie Mae has also distributed short sale processing software to numerous MLSs across the US.

Many in industry are happy about it, and wish it had happened years ago.

Fannie Mae Now Accepting Online Offers for REOs

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via: DSNews.com/Carrie Bay

Fannie Mae announced Tuesday that it has expanded its online system to accept purchase offers for all its REOs listed for sale.

Real estate agents will now submit offers online on behalf of clients, receive receipt confirmation, and track the status of submitted offers through the HomePath.com website. HomePath is the GSE’s REO disposition operation.

In November 2010, Fannie Mae launched the HomePath Online Offers pilot in Orlando, Florida; San Diego, California; and Detroit, Michigan. Active Data Technologies, Inc., the developer of the offer platform, commented just five months after the launch that the technology was seeing positive results in these three test markets.

Now, the Online Offers feature is available for all Fannie Mae-owned properties across the nation through HomePath.com.

“Collecting offers online through HomePath.com will provide greater transparency for homebuyers and their agents,” said Jay Ryan, VP for REO at Fannie Mae. “Our online platform will make it easier to sell properties to owner occupants, which is a major factor in helping to stabilize communities across the nation.”

George Philbeck, a real estate professional with Keller Williams Advantage II Realty in Orlando, has been using Online Offers since the pilot launched in 2010.

“As an agent, I believe Online Offers is efficient, informative and user-friendly,” Philbeck said. “With Online Offers, my clients’ offers are guaranteed to make it to the right person at Fannie Mae for review. It has worked very well for me and for my clients.”

Real estate professionals representing buyers are able to connect directly with Fannie Mae’s listing agents through the HomePath website. The buyer’s agent can also find information on the site regarding financing and incentive options offered through HomePath.

The HomePath site offers a wide selection of properties, including single-family homes, condominiums, and town houses.

Brad Geisen, president and CEO of Active Data Technologies, called HomePath Online Offers a “step in the right direction” by automating the transaction process to move inventory quicker and get the housing market on the road to recovery faster.

Construction, Manufacturing Continue To Improve

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via: UTSanDiego.com

Two key areas of the U.S. economy - construction and manufacturing - started 2012 on a positive note, after recovering from a sharp slump last summer.

Despite the improvements, however, both industries face an uphill battle to recover from historic lows. San Diego County is performing better than the national trend in some areas and worse in others - particularly employment.

Manufacturing offers the brightest signs of economic growth, according to a monthly index by the Institute of Supply Management.

Although manufacturing dipped sharply in the middle of the year, when squabbling on Capitol Hill and troubles in Europe raised the specter of a double-dip recession.

But output began picking up in November and the January figures, which were released today, are the best since last springtime.

"Manufacturers reported the largest increase in new orders since last April," said Chris Williamson, chief economist at Markit. "The faster growth of orders reflected improved demand from home markets as well as abroad. Encouragingly, backlogs of work rose for the first time in eight months, suggesting that the current rate of growth of new orders is stretching manufacturing capacity, leading firms to hire additional staff."

Williamson says that the new orders indicate that February's numbers will be better than January's.

Like manufacturing, construction has been recovering from a midyear slump. But with real estate prices still on the decline, the outlook isn't as positive as for manufacturing.

Construction spending rose 1.5 percent in December after a 0.9 percent rise in November, or 4.8 percent ahead of December 2010, according to a report by the U.S. Census Bureau today.

Even with that late year uptick, however, the yearly total for construction spending in 2011 was 2 percent below 2010.

"The construction numbers for 2011 were dismal," said Patrick Newport, U.S. economist for IHS Global Insight. "Total spending was at its lowest level since 1999 and after adjusting for inflation, the numbers look much worse."

Newport added that the numbers improved as the year went on and the improvements will likely extend on this year. But partly because of government cutbacks on public works projects, he does not expect 2012 to be much better than 2011 for construction.

Here's how the various categories broke down in December.

Single-family homes.

• Compared to November 2011: Up 1.5 percent
• Compared to December 2010: Up 3.8 percent.
• Yearly total: Down 5.1 percent. San Diego seems to have come out better than the national average, with single-family housing remaining basically flat. In 2011, the county issued one less permit for a new single-family home than in 2010.

Apartments, condos and duplexes.

• Compared to November 2011: Down 0.3 percent, but that came after a huge 6.1 percent jump in November.
• Compared to December 2010: Up 18.8 percent.
• Yearly total: Up 0.3 percent. Multifamily housing had an even healthier rise in San Diego County, but because of the lack of growth in single family homes, it remained the third worst year on record, after 2009 and 2010.

Nonresidential construction.

• Compared to November 2011: Up 1.9 percent, driven mainly spending on communications construction (e.g., laying new phone lines or constructing cell towers) and manufacturing plants for computers and electronics.
• Compared to December 2010: Up 4.5 percent.
• Yearly total: Down 1.7 percent. The mid-year slump wiped out the gains of the early part of the year, and most sectors have not bounced back. In the second half of the year, most growth came from power and transportation projects, schools and electronics-related factories.

Government-funded construction.

• Compared to November 2011: Up 0.5 percent, mainly for road, power, sewage and water projects.
• Compared to December 2010: Down 2.5 percent.
• Yearly total: Down 6.5 percent. Further cutbacks are expected this year.

Mortgage Rates Spike On Blow-Out Jobs Figures, Drop In Unemployment Rate

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via TheMortgageReports.com - Dan Green

The U.S. economy is in recovery. It may not always feel it, but it is. Numbers and data don't lie. January's Non-Farm Payrolls is the latest in a series of strong economic indicators and it would be best if home buyers and rate shoppers paid attention.

Mortgage rates are spiking right now as Wall Street begins to bet with the economy instead of against it.

 

2.1 Million Jobs Created Since January 2011

Each month, on the first Friday, the Bureau of Labor Statistics releases its Non-Farm Payrolls report. More commonly called the "jobs reports", Non-Farm Payrolls details the employment situation of the United States, summarizing by sector and providing aggregate figures for the economy.

In January, the U.S. economy added 243,000 net new jobs, and prior Non-Farm Payrolls data was revised to show that an additional one-hundred-eighty thousand new net jobs were created last year than were initially tallied.

As compared to one year ago, there are 2.1 million more jobs in the U.S. economy.

Also included in the Non-Farm Payrolls report is the national Unemployment Rate, a measure of the number of people "in the U.S. workforce" and without work. After last month's strong jobs figures, the Unemployment Rate is down to 8.3% -- its lowest since February 2009.

 

Mortgage Rates Rising Because Of Job Creation

A weak economy contributed to low mortgage rates between 2009-2011. In only makes sense, therefore, that mortgage rates would rise when the economy begins to recover and that's precisely what we're seeing today.

It's no coincidence that the instant that the jobs report hit the wires, the MBS market sold-off. Within 60 seconds, mortgage bonds had lost enough value to raise conforming mortgage rates 0.125% across the board. This is because an improving economy makes Wall Street feel better about "taking risk" and bond markets are the anti-thesis of said risk.

Mortgage rates are rising as stock markets gain.

The all-time lows from earlier this week are history, lost to an improving U.S. economy. FHA mortgage rates, conforming mortgage rates, and jumbo mortgage rates are all higher today and should remain elevated over the near- to medium-term, absent explicit market intervention from the Federal Reserve.

 

See Today's Mortgage Rates

If you missed low rates earlier this week, don't sweat it. You can never know when a market is truly bottoming-out. You can only see the bottom after prices start rising. That may be today.

Mortgage rates remain historically low. Meanwhile, there are, literally, hundreds of thousand of U.S. households leaving thousands dollars in annual mortgage savings on the table because they've never asked about a refinance.

Today would be a good time to do that -- before rates rise even more.

The First 100 Days Of HARP : Mortgage Rates, LTVs, Statistics And Figures

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via TheMortgageReports.com - Dan Green

100 days ago, the government announced updates to its HARP refinance program.

HARP stands for Home Affordable Refinance Program and is conventional mortgage "for underwater homeowners". It's an appraisal-less refinance for loans backed by Fannie Mae and Freddie Mac; the conforming mortgage equivalent of the FHA's FHA Streamline Refinance program.

Over HARP's first 100 days, this website logged 4,177 HARP Refinance requests via Rate Quote Widget -- the "Live Rate Quote" form shown at top-right. What follows is a statistical breakdown of those HARP Refinance requests.

HARP Refinance Momentum Still Building

The revised HARP refinance program was a long time coming. Underwater homeowners found little relief via HARP's first iteration. It's no wonder, therefore, that when HARP 2 was announced in October 2011, homeowners jumped all over it.

The pent-up demand for a product like HARP was huge. Within the first 24 hours, requests for HARP mortgage rates arrived at a furious pace, spurred by news coverage and online commentary. HARP queries slowed after those first few days.

Then, on November 14, HARP queries surged again. This was the day that Fannie Mae and Freddie Mac announced HARP "operational details" including HARP pricing structures, HARP product restrictions, and a HARP roll-out date of December 1 (which explains the spike on that same date).

HARP homeowners have been aware of the program's milestone dates and product interest tends to rise as these dates approach.

Since the New Year, interest in the HARP program among the nation's homeowners is rising.

Click here to get a HARP rate quote.

40 Percent Of Homeowners Over 125% Loan-To-Value

When the government's released its first version of HARP, the program helped underwater homeowners refinance their home loans, but loan-to-values were limited to 125%. This means that for every $100,000 you borrowed, you had to have at least $75,000 of home equity.

By contrast, the new HARP allows for unlimited LTV on fixed rate loans.

It's a good thing, too -- more than 40% of today's HARP applicants have a loan-to-value of 125% or higher so whether you own a condo in Florida or a home in Phoenix, no matter how much equity you've lost since you purchased, you can still be HARP-eligible and get a mortgage for your underwater home.

Click here to get a HARP rate quote.

93% Of HARP Applicants : Rate of 5% Or Higher

As mortgage rates have dropped to all-time lows, the value of a HARP Refinance to an underwater homeowner increases. HARP gives underwater homeowners the chance to refinance to today's low rates regardless of how high their loan-to-value happens to be.

9 out of 10 HARP applicants report mortgage rates north of 5 percent.

Click here to get a HARP rate quote.

There's a lot of money to be saved with HARP and the government is doing what it can to help HARP homeowners take advantage. So much so that HARP applicants will not be subject to the same loan-level pricing adjustments as the rest of the refinancing world.

For loans with a 30-year term -- fixed or adjustable -- loan-level pricing adjustments are capped at 75 basis points. For 15-year fixed and 20-year fixed rate loans, LLPAs are removed in full.

In reducing and/or eliminating loan-level pricing adjustments, homeowners using HARP to refinance should expect to receive mortgage rates 0.125-0.250% lower than their non-underwater, home-owning counterparts.

Click here to get a HARP rate quote.

Top States For HARP Refinances :  California, Florida, Arizona

Since HARP 2's release, the majority of HARP queries have come from states in which home values have soured.

Homeowners in California, Florida, Arizona and Georgia account for more than half of all HARP Refinance queries. Other states with high HARP query figures include Illinois, Virginia, and Michigan.

It's also notable that the overwhelming majority of HARP 2 mortgage rate queries have been for primary residences. There have been very few queries for second homes and investment properties (although both are HARP Refinance-eligible).

Click here to get a HARP rate quote.

Unlimited LTVs : Great For Nevada, Arizona, Florida

The most well-known feature of the revamped HARP Refinance program is that it allows unlimited loan-to-values on fixed-rate mortgages. Appraisals aren't even necessary, in most cases.

Click here to get a HARP rate quote.

Under the new HARP guideline, it doesn't matter if how far your home is underwater -- you don't need home equity to refinance. This means that residents of Nevada -- where self-reported LTVs top 151% -- can breathe easy . So long as you meet the HARP program's other mortgage guidelines, you'll be approved.

The same is true in other high loan-to-value states including Arizona (137% LTV) , Florida (131% LTV) and Michigan (121%).

Even in states like Ohio and Tennessee, HARP's unlimited LTV rule is a plus. Values are down like they are in Miami or Las Vegas, but values are down. With less home equity, homeowners in Cincinnati and Nashville, for example, have been completely shut out from a refi.

With the new HARP program, refinancing to lower rates is now possible.

 

The New HARP Refinance Will Spur The Economy Forward

When a homeowner can refinance and save money, it's good for the U.S. economy. Each refinance type yields direct economic benefit -- locally and nationally.

1. Rate-and-Term Refinance : Lowers a homeowner's monthly mortgage payments; Creates a "pay raise" effect.
2. Cash-Out Refinance : Helps a homeowner to pay down credit cards and/or  buy "things" including appliances and education.
3. Term-Reduction Refi :  Switching from a 30-year mortgage to 15-year mortgage cuts long-term interest costs by tens of thousands.

The HARP Refinance program was re-released with a nod to these three loan types. Not all households will meet the new HARP mortgage guidelines, but those that do will have a lot to gain.

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Mortgage Rates Reverse Course

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via DSNews.com/Carrie Bay

Freddie Mac reported Thursday that mortgage interest rates have done a 180 and are now starting to climb, buoyed by positive housing data over recent weeks which show the market ended 2011 on a high note. Still, interest rates on home loans remain extremely low by historical standards.

For the week ending January 26, the 30-year fixed-rate mortgage averaged 3.98 percent (0.7 point), reversing its previous three-week trend of setting all-time record lows. Despite the jump, this marks the eighth consecutive week the 30-year fixed rate has remained below 4.00 percent.

The 30-year rate jumped 10 basis points over the past week, up from 3.88 percent reported by the GSE last Thursday. As a point of comparison, though, last year at this time the 30-year averaged 4.80 percent.

Freddie Mac’s study puts the 15-year fixed-rate mortgage at 3.24 percent (0.8 point) this week, up from last week’s average of 3.17 percent. A year ago at this time, the 15-year rate was averaging 4.09 percent.

The 5-year adjustable-rate mortgage (ARM) averaged 2.85 percent (0.7 point) this week. It was 2.82 percent last week and 3.70 percent this time last year.

The 1-year ARM was the only loan product in Freddie’s study that did not show upward movement, but there was no downward movement either. It came in at 2.74 percent (0.6 point), matching last week’s average. A year ago, the 1-year ARM averaged 3.26 percent.

Frank Nothaft, Freddie Mac’s chief economist, cited several pieces of positive housing data that point to improvements in the marketplace.

New construction of single-family homes rose 4.4 percent in December to an annualized rate of 470,000. That’s the most since April 2010, Nothaft noted.

Existing home sales increased 5.0 percent at the end of 2011 to an annualized sales pace of 4.61 million units – the largest amount since May 2010.

In addition, Nothaft points out that pending home sales in November and December averaged the highest reading since the March and April 2010 period.

Freddie Mac’s weekly mortgage rate survey averages data gathered from 125 lenders across the country.