CAN YOU REFINANCE EVEN IF YOU DON'T HAVE ANY EQUITY?

The answer is YES!  The government just rolled out the new HARP loan.  This program allows people with Good Credit, but no equity in their home, a chance to refinance and take advantage of these low rates! 

Here's how it works: Any homeowner can take advantage of this program if they:

1. Have purchased and settled on a home before June, 2009,
2. Have a Fannie Mae (FNMA) or Freddie Mac (FHLMC) held mortgage,
3. Don't owe more than 105% of the home's value (If home is a Row or a Twin),
4. Don't owe more than 150% of the home's value if the subject property is a (Single),
5. Have not been 30 days late on any mortgage payments,
6. Have a minimum of a 660 credit score.

If you or anyone you know meets all of the above criteria, you or they can take advantage of this program.
The interest rates for this program are slightly higher than normal rates, so you need to make sure that this program will work for you.

If your loan has PMI insurance included in the monthly payment, we need to determine who the PMI insurance company is just to make sure that they are participants in this program.  Participating PMI companies have special rates for these loans where their premiums won't increase over what you are currently paying on your existing mortgage.

Many of the loans acquired during the years of the peak housing prices are combination loans such as: 80/20s, 80/10/10s or 80/15/5s.  As many of you know, this meant that you were given a 1st mortgage, as well as a home equity loan, in order to avoid having to pay PMI insurance.  This refinance WILL NOT include the payoff of any junior liens ( Home Equity loans, Lines of Credit or 2nd Mortgages ).  These secondary lenders will have to agree to Subordinate their liens.  This means that they will have to allow the current 1st mortgage to get paid off with the refinance.  They will have to step back into a 2nd lien position on the property, once again.  Most lenders are willing to do this given the circumstances surrounding the current state of the housing market. 

This loan offers a chance for someone, who were told they can't take advantage of these low rates, to refinance their mortgage and either reduce their monthly payment, or reduce the remaining term of their loan.   You can't borrow any additional money to do any repairs or consolidate bills.  This program is only for those looking to get a better interest rate.  Closing costs can be rolled in to the mortgage to a maximum of 4% of the total loan amount.  This should cover most if not all of the closing costs. 

Please contact me for more details regarding the specifics of this program.

Andy Williams NMLS # 118317
President
Abacus Regional Mortgage NMLS # 113984
484 695 5972

Why don't more people listen to me?

I have told you before that you can't believe what you read, unless it comes from what I write, of course.  The word has been going around that FHA would be lowering the amount the seller can pay toward the buyer's closing costs.  Doing this would have a http://blog.american.com/2012/01/five-reasons-president-obamas-mass-refinance-plan-deserves-to-be-a-non-starter-and-two-modest-alternatives/catastraphic effect on the entire housing market.  With the government doing everything they can do to jump-start the housing market, they realize that a change like this could be detrimental to an improving economy.  They aren't stupid!  Just last year there was talk that the President was proposing changes to the conventional mortgages where they would finance only 70% of a home purchase price.  In other words, they were going to require a 30% down payment.  I read this too, but I have been in the business long enough   (4 decades ), that I knew that this would never come to fruition.  This too has little chance of happening.  Rest easy, better days are here, and they will continue to improve.

Andy Williams NMLS # 118317
President
Abacus Regional Mortgage NMLS # 113984
484 695 5972

Is this the beginning of the end?

Interest rates rose this past week for the first time in months. With no real apparent reason, we received higher rate increases, sometimes multiple times throughout the day. Whatever the reason, I sure hope this trend doesn't continue. Friday they got better, so I hope with this being an election year, they stay low for at least the next 9 months. Already, there has been an increase in activity, with many more sales compared to last year at this time. The amount of housing inventory, even with the short sales and foreclosures, is shrinking. Good bargains
are going quickly, with multiple offers on some houses. Since the housing
market is showing some signs of improving,we need to keep this momentum going!

Andy Williams NMLS # 118317
President
Abacus Regional Mortgage NMLS # 113984
484 695 5972

IMPENDING FHA CHANGES

There are three major changes being proposed with FHA Mortgages. First, they are proposing changing the up front MIP, which is financed into 99% of FHA mortgages, from 1% to 1.75% of the loan amount. Second, they are increasing the monthly Risk Premium (equivalent to PMI on a conventional loan) from 1.15% to 1.25% of the base loan amount. These two changes are subtle with minimal impact on the borrower's monthly payment. The third, and most significant change, is they are reducing the allowable seller's assistance toward the buyers closing costs. It is currently 6% of the selling price, and now it will be reduced to 3% of the selling price or $6,000, whichever is greater. Since many of the closing costs are fixed costs, it will help the low-end buyer be able to cover more of their closing costs. For example, if a buyer purchases a home for $60,000, they may have closing costs as high as $ 6,000. Under the current system, the seller may only pay $ 3,600 (6%), which means the buyer will have to come up with the difference. Now the $ 6,000 rule will cover all of the buyers closing costs at settlement. Lets use another example for a high-end transaction. Lets use a $ 300,000 purchase. With closing costs being $ 15,000, the old rule allowed too much seller's assist ($18,000). Under the new rule where they are allowed only 3%, the seller is limited to giving $ 9,000. The buyer will have to come up with an additional $ 6,000 to close in addition to their 3.5% down payment. These changes will benefit the low-end buyers, and help stimulate the economy, or so they say. It remains to be seen.

Andy Williams
President
Abacus Regional Mortgage (NMLS# 113984)
484 695 5972
NMLS # 118317

NO PMI insurance on Conventional Loans with only 5% down

The program is what is known as LPMI. This stands for Lender Paid Mortgage Insurance. The lender pays a Single Premium Up-Front charge, and the buyer is exempt from paying any monthly Mortgage Insurance for the life of the loan. The borrower must still go through the formal approval process through a participating PMI company, but they won't have to pay anything toward this program. This is offered by a few lenders for buyers who desire not to pay PMI or the FHA monthly risk premium. It is offered only on conventional loans with a minimum down payment of 5% and buyers with at least scores of 680 or higher. The higher their credit score is, the lower the interest rate that is offered to the buyer. Their is a cost to this in the form of a higher interest rate. The average add-on to the interest rate is .25%, but the actual hit can vary based on the borrower's credit score and the amount of the down payment. Obviously, a person with a 800 credit score and 15% down payment will pay less than a borrower with a 680 score and only 5% down. The best part is that the overall monthly payment goes down substantially for the customer - at least by 5%.

Please call me with any questions or additional details.

Andy Williams
President
Abacus Regional Mortgage
484 695 5972
andrew.williams@abacusmort.com
www.abacusmort.com

COULD THIS BE THE BEGINNING OF A NEW MARKET?

I don't want to jinx myself, but the Real Estate market seems to have opened up. I had my best months in newly originated loans in the last quarter of 2011. It reminds me of 1997. Normally after Thanksgiving, things slow down as we go into the holiday season. It is a time to reflect on the year's acitivites. Yu can regroup and work on year-end reports and tax returns. Instead of getting ready for 2012, December was extremely busy in new loans. I had hoped for some momentum going into the new years. Well, I had my best January in 18 years and there doesn't appear to be any sign of slowing down. Is this is a sign of things to come, or an anomaly in the market? One can only hope it is the former.

Andy Williams
President
Abacus Regional Mortgage

Do Some Buyers Think the Interest Rates Are High ?

I have heard more than one buyer state that the interest rates are too high. I can't even fathom that kind of talk. With interest rates at their historic lows right now they can't go much lower. They have no where to go but up! When I was in college studying business in 1981, the interest rates on conventional mortgages got as high as 18%, Fha/VA 16.5%. When I started originating mortgages in 1986 the interest rates had just fallen to as low as 10%, sometimes dipping as low as 9.5%. These rates are a gift and a temporary phenomenon to boost the economy. Buyers should seize this opportunity, especially those who've yet to purchase a home, because they won't last. The home prices are down significantly from their highs. The combination of these two opportunities make it a must for every willing and able buyer to buy a home now!

Andy Williams
President
Abacus Regional Mortgage
484 695 5972