The Fed raised rates... How does that affect you and home loan interest rates?

The Federal Reserve ended its zero-interest rate policy in December 14, 2016, raising rates by 25 basis points (0.25%) for the first time in more than a decade.

However, the Fed move did not lead to an increase in consumer mortgage rates. 

U.S. mortgage rates aren't set or established by the Federal Reserve or any of its members. Rather, mortgage rates are determined by the price of mortgage-backed securities (MBS), a security sold via Wall Street.

The Federal Reserve can affect today's mortgage rates, but it cannot set them.  The Fed does more than just set the Fed Funds Rate. It also gives economic guidance to markets.

For rate shoppers, one of the key messages for which to listen is the one the Fed spreads on inflation. Inflation is the enemy of mortgage bonds and, in general, when inflation pressures are growing, mortgage rates are rising.

Mortgage rates are based on the price of mortgage-backed securities (MBS) and mortgage-backed securities are U.S. dollar-denominated. This means that a devaluation in the U.S. dollar will result in the devaluation of U.S. mortgage-backed securities as well.

When inflation is present in the economy, then, the value of a mortgage bond drops, which leads to higher mortgage rates.

This is why the Fed's comments on inflation are closely watched by Wall Street. The more inflationary pressures the Fed fingers in the economy, the more likely it is that mortgage rates will rise.

Thirty-year fixed mortgage rates rose more than half a percentage point in the four weeks after the election of Donald Trump. Rates are solidly over 4% for the first time this year. On a 30-year fixed-rate mortgage for $300,000, each half-point increase adds close to $100 a month to your payment.

So that’s already happened.

With additional Fed rate hikes expected next year, mortgage rates may have as much as another half a percentage point to go. That would put home loan interest rates just under 5% by the end of 2017. 

If you’re all set to buy, don’t let moderately higher mortgage rates worry you. Proceed according to your plan. Although the long-term outlook seems to indicate steadily rising interest rates, we’re building on very low ground. You know that whole “historically low mortgage rates” thing you’ve heard for the last few years? Yeah, we’re still there.

It will take a long climb higher before mortgage rates are back to their 44-year historical average of 8%. In the meantime, you’ll be in the money with a 4% or 5% home loan. Even a 6% mortgage is a significant discount to the average.

Yes, your buying power can be affected by higher interest rates, but that can also be offset by the better wages and greater employment opportunities of an improving economy.

Take a look at today's real mortgage rates now in your area. Your social security number is not required to get started!

Mortgage Insurance for FHA Insured Loans

Updated 9/16/16 

Mortgage insurance is a policy that protects lenders against losses that result from defaults on home mortgages. FHA requirements include mortgage insurance for all borrowers.

Current Up-Front Mortgage Insurance Premium 

The UPMIP is currently at 1.75% of the base loan amount. This applies regardless of the amortization term or LTV ratio.

Current Up-Front MIP on Certain Streamline FHA Refinances

Streamline refinance transactions that are refinancing FHA loans endorsed on or before May 31, 2009, the UFMIP is currently 0.01 percent of the base loan amount.

Current Annual MIP on Certain Streamline FHA Refinances

Streamline refinance transactions that are refinancing FHA loans endorsed on or before May 31, 2009, the Annual MIP will be 55 basis points, regardless of the base loan amount and takes effect on or after June 11th, 2012.

*Revision to the Annual MIP Premium – as per Mortgagee Letter 2015-01

There will be no change in Annual Mortgage Insurance Premiums for all case numbers assigned on or after January 26th, 2015 for the following:

1. On loans with a Loan to Value of less than or equal to 78% and with terms up to 15 years. The annual MIP for these loans will remain at 45 basis points.
2. On terms <= 15 years and loan amounts <=$625,500 - If the loan to value is <= 90%, the Annual Premium remains the same at 45 basis points (bps). If the loan to value is >90%, the Annual Premium remains the same at 70 basis points (bps).
3. On terms <= 15 years and loan amounts >$625,500 - If the loan to value is 78.01% - 90.00%, the Annual Premium remains the same at 70 basis points (bps). If the loan to value is >90%, the Annual Premium remains the same at 95 basis points (bps).

There will be the following reduction in premiums in Annual Mortgage Insurance Premiums for all case numbers assigned on or after January 26th, 2015 for the following:

1. On terms > 15 years and loan amounts <=$625,500 - If the loan to value is <= 95%, the new Annual Premium is reduced from 130 basis points (bps) to 80 basis points (bps). If the loan to value is >95%, the new Annual Premium is reduced from 135 basis points (bps) to 85 basis points (bps).
2. On terms > 15 years and loan amounts >$625,500 - If the loan to value is <= 95%, the new Annual Premium is reduced from 150 basis points (bps) to 100 basis points (bps). If the loan to value is >95%, the new Annual Premium is reduced from 155 basis points (bps) to 105 basis points (bps).

Term > 15 Years

Base Loan Amount

LTV

Effective

Annual MIP

< = $625,500

< = 95.00%

26-Jan-15

80 bps

< = $625,500

>95.00%

26-Jan-15

85 bps

Above $625,500

< = 95.00%

26-Jan-15

100 bps

Above $625,500

>95.00%

26-Jan-15

105 bps

Term < = 15 Years With LTV Above 78%

Base Loan Amount

LTV

Effective

No Changes to Annual MIP

Any Loan Amount

< =78.00%

3-June-13

45 bps

< = $625,500

< =90.00%

1-April-13

45 bps

< = $625,500

>90.00%

1-April-13

70 bps

Above $625,500

< = 90.00%

1-April-13

70 bps

Above $625,500

>90.00%

1-April-13

95 bps

*No Revision to the time period for Assessing Annual MIP

For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP, which is the time on which you will pay for FHA Mortgage Insurance Premiums on your FHA loan. They are as follows:

Term

LTV %

Previous

New

< = 15 yrs

< = 78

No Annual MIP

11 years

< = 15 yrs

> 78 - 90.00

Cancelled at 78% LTV

11 years

< = 15 yrs

> 90.00

Cancelled at 78% LTV

Loan Term

> 15 yrs

< = 78

5 years

11 years

> 15 yrs

>= 78 - 90.00

Cancelled at 78% LTV & 5 yrs

11 years

> 15 yrs

> 90.00

Cancelled at 78% LTV & 5 yrs

Loan Term

Have more questions, our team is here to help!

702-326-7866 

www.ilendlasvegas.com

Why Does My Online Credit Score Differ From My Mortgage Lender Credit Score?

Lenders use different credit scoring models to gauge your risk as a borrower. Each lender chooses the one that best suits its needs, and some use scores that are weighted according to their industry. For example, a mortgage lender might use a different scoring model than an auto lender. Other lenders use a blend of the scores that are assigned to you by the three credit reporting agencies (CRAs)...

A credit score calculates your risk level for a lender based on your past performance managing debt. What many consumers do not realize is that they have more than one credit score. Numerous formulas exist for calculating credit scores, and each bureau does so a different way. Because no two formulas are the same, your credit scores will differ depending on the type of credit score you pull. In addition, you have a separate credit score with each of the three credit bureaus. If you pull a different type of credit score than your lender pulls, your numbers and your lender's numbers won't be the same.

The majority of mortgage lenders utilize FICO scoring. FICO scores are based on a proprietary formula owned by the Fair Isaac Corp. When a lender requests your FICO scores, it receives a tthree bureau report that contains your FICO score from each credit bureau. Unfortunately, consumers don't have access to all three of their FICO scores. You can purchase your TransUnion and Equifax FICO scores directly through the Fair Isaac Corp.'s website, myfico.com. You cannot, however, purchase your Experian FICO score. Experian releases FICO scores to lenders, but not to consumers.

Most individuals who decide to pull their credit scores online visit what they believe is the most reliable source for the information – the credit bureaus. The credit bureaus, however, sell you their own proprietary score known as a “Vantage Score.”  FICO scores ranges from 300 to 850, Vantage Scores ranges from 501 to 990. Due to its higher range, your Vantage Score will always be higher than your true FICO score. This can lead to disappointment when you visit a lender armed with what you believe is an excellent credit score only to be told that you aren't as qualified as you thought you were. The only way to ensure that the scores you are purchasing are legitimate FICO scores is to buy them directly from the Fair Isaac Corp.

Your FICO score is calculated using the information that appears on your credit report with each credit bureau. You don't have to pay to review the information for accuracy. The Fair Credit Reporting Act gives you the right to pull a free credit report from each credit bureau once each year at  www.annualcreditreport.com. It does not, however, give you the right to free FICO scores each year. Advertisements for free credit scores generally require you to sign up for an annual service or don't offer you your actual FICO scores. The bad news is that if you want real FICO scores, you'll have to pay for them. The good news, however, is that with your real FICO scores in hand, you can rest assured that your scores will match your lender's.

Need more information? Need to check your credit report?

www.iLendLasVegas.com

DID YOU PARTICIPATE IN NATIONAL MAKE A WILL MONTH?

August is National Will Month - Do you have a will?

What do you want to leave behind for your loved ones? One thing is for sure: you don’t want to leave behind a disorganized estate with a sizeable debt. Those who fail to plan for the future often end up leaving a financial and emotional burden on the people they love most. The purpose of National Make a Will Month is to encourage people to take the initiative and plan for their futures. If you don’t have a will drafted yet, we can recommend some attorney's for all the guidance you need. This article will point out common pitfalls of estate planning and offer effective tips to make sure you do it right the first time.

What is a will?
Do’s and Don’ts For Making a Will

Your will leaves detailed instructions for the distribution of your belongings and property amongst your family and loved ones. It also details who will assume legal guardianship of your children if they’re minors. If a will is not left behind, state intestacy laws will determine what happens to your belongings. Family heirlooms and items of value are distributed according the law of the land, and the individual appointed by the state to assume guardianship of surviving children may not be the person you would prefer. To ensure your assets are divided fairly and correctly, a valid will must be drafted.

• Don’t: Make a Do-It-Yourself will. These appeal to those who want to leave a will without paying the legal fees for an attorney to draw it up. Those who opt for a self-made will put their assets at risk. Hiring a qualified attorney is well worth the investment. They will make sure the will is instructive and legally sound, ensuring that your beneficiaries won’t have to hire an attorney to interpret it down the line.

• Do: Make sure that beneficiary designations on insurance policies and retirement plans are consistent with the contents of your will. These policies and accounts will take precedence over designations specified in your will.

• Do: Update your will with a comprehensive estate plan review. An update will help you understand issues regarding your assets in other states, how to validate your will when moving to a new state, and how to keep the titles of your properties.

• Don’t: Expect the terms of your will to be private. During the probate process, your friends and family will learn about the distribution of your assets. To keep the transfer of possessions more private, look into setting up a trust. Through a trust, your assets change hands confidentially and can be protected from divorce claims.

• Don’t: Rely on a will to protect your assets from creditor claims. If you leave behind a sizeable debt, a creditor may seize your property regardless of who you have chosen to give it to in your will.

• Do: Contact an attorney to help you plan your estate.

TOP SEVEN most effective marketing tools for Real Estate Agents

Here are the TOP SEVEN, most effective marketing tools I know of for generating more buyer leads for your Realtors' listings...

#1: Fusion Ads. This involves placing a text capture ad in the local Real Estate Weekly newspaper. For best results, withhold the asking price and invite buyers to text the listing code in order to receive more information, including price and financing options, on their cell phone. Each time someone requests more info, you and your Realtor will be instantly notified via email. Then, as an added-value service, you can follow up by phone on behalf of your Realtor to see if the buyers would like to view the property, get pre-approved or hire a buyer's agent.

#2: Just Listed Cards.  What better way to announce a new listing to the neighborhood than to mail out a Just Listed Card to the entire postal code surrounding the new listing. The postcard should have an attention-grabbing headline like, "Just Listed In Your Neighborhood," and should also highlight any unique financing options available, perhaps with a starburst that says, "95% Financing Available!" Of course, it would also include typical features such as the property description, photos, logo, contact info, etc. However, where this card gets unique is in the withholding of the price and integrating text capture, as explained above.

#3: Lead Capture Sign Riders. A sign rider is a sign designed to piggyback or "ride" along with the Realtor's normal For Sale Sign. It's designed to give a call to action that generates leads. There are two different types of lead capture rider signs: Call Capture and Text Capture. Implicit in its name, the Call Capture version invites people to call a 24-hour hotline to receive "FREE Recorded Info & Price." When someone calls, they can hear all the details in audio format. The Text Capture version, on the other hand, invites people to send a text using their cell phone to request this information. At the end of the day, they both accomplish the same thing -- attracting leads! However, text capture tends to be an easier sell with Realtors because it's still considered relatively new and "cutting edge."

#4: Open House Feedback Forms. Believe it or not, a lot of Realtors don't even use a guest registry at their open houses, let alone feedback forms. Implementing this powerful tool will allow you and your Realtors to collect valuable feedback about the property so you can see how buyers and their agents perceive it. Not only that, it can also help you identify and qualify hot mortgage prospects.

Here are a few critical components to consider including in your feedback forms:

• Chance to win a prize. Let's face it, most people are hesitant to give away their contact info unless there's a sufficiently compelling reason to do so. That's why I recommend offering a chance to win a prize. For example, you could place a headline at the top of the feedback form that says, "Thank you for coming to our Open House. Please give us your FEEDBACK and ENTER to WIN a $100 Home Depot Gift Certificate!"
• Feedback. Get the prospect to rate various aspects of the property, including its overall condition, landscaping, neighborhood, price, etc. You can also ask what the prospect liked most and what they liked least. This critical feedback will help your Realtor make quick adjustments to help sell the property faster at top dollar.
• Qualifying questions. At the end of the feedback form, be sure to include the following qualifying questions: 1) Do you have a buyers’ agent to help you find your dream home?  2) Are you pre-approved for a mortgage yet? These questions will flag hot prospects for you and your Realtor.

#5: Email Marketing. I'm on several Realtors' email lists and it's amazing how few of them notify me via email when they get a new listing. In fact, now that I think of it, I can't even recall one time when I've received a "Just Listed" email notification. Not even once! That means there is a lot of untapped opportunity here. All the Realtor has to do is blast out an email to their database announcing the new listing with a link to their website for people to get more information. It ain't rocket science.

#6: Facebook Marketing. Once the email has been sent out, the Realtor can simply cut and paste the exact same message as a status update on their personal profile and/or fan page in Facebook. This allows the Realtor's friends and fans to receive the announcement in their newsfeed. If the Realtor is smart, they'll ask the reader to "Share" the announcement with their Facebook network, which increases the chances that the announcement will go viral! And here's the best part: like email, it won't cost you or the Realtor a single penny to do this.

#7: Craigslist Marketing. You can help your Realtors post listing ads in the real estate section of Craigslist and other classified ad websites. To make things easier, I provide my realtor partners with a powerful automation tool that allows you to post these ads instantly -- just three clicks of a mouse and you're good to go! It also allows you to track all your hits and unique visitors. Since many people go to these classified websites to look for properties for sale, this is great way to build exposure.

Another cool feature included with this automation tool is the ability to instantly create single property websites and then publish them to fourteen of the most traveled property search engines on the planet with a click of a button. So it's got a huge syndication effect, allowing your Realtors' listings to get in front of more eyeballs, more often.

So there you have it, I've just given you the eighth and final secret for attracting referrals like crazy.  If you're like most of my realtor partners, you might find this a little overwhelming at first. Relax. It's not as difficult as you might think, especially if you utilize my turnkey templates, tools and technology. If you'll simply take the time to learn and implement the steps I've laid out for you, I guarantee you'll see a marked, dramatic improvement in your ability to attract more referrals.

I've given you everything you need to know to get started. Now it's time to take action. Take massive action and get you'll get massive results! I'm looking forward to hearing your success stories as you go forth and make it happen.

FHA Streamline Refinances - Some things to know...

FHA Streamline

The FHA Streamline is a refinance mortgage loan available to homeowners with existing FHA mortgages. The program simplifies home refinancing by waiving the documentation typically required by a bank, including income and employment verification, bank account and credit score verification, and an appraisal of the home. Homeowners can use the program to reduce their FHA mortgage insurance premiums (MIP).

NOTE: FHA mortgage guidelines change often. Make sure to check with your lender for any new changes...

What Is An FHA Streamline Refinance?

The FHA Streamline Refinance is a special mortgage product for homeowners with existing FHA mortgages.

FHA Streamline Refinances are the fastest, simplest way for FHA-insured homeowners to refinance their respective mortgages into today's mortgage rates.

The FHA Streamline Refinance program's defining characteristic is that it does not require a home appraisal.

Instead, the FHA will allow you to use your original purchase price as your home's current value, regardless of what your home is actually worth today.

In this way, with its FHA Streamline Refinance program, the FHA does not care if you are underwater on your mortgage. Rather, the program encourages underwater mortgages.

Even if you owe twice what your home is now worth, the FHA will refinance your home without added cost or penalty.

The "appraisal waiver" has been a huge hit with U.S. homeowners, allowing unlimited loan-to-value (LTV) home loans via the FHA Streamline Refinance program.

Homeowners in places like Florida, California, Arizona and Georgia have benefited greatly, as have homeowners in other states and cities affected by last decade's housing market downturn.

Beyond this "no appraisal" feature, however, the FHA Streamline Refinance behaves very much like any other loan product.

It's available as a fixed rate or adjustable mortgage; it comes as a 15- or 30-year term; and there's no FHA prepayment penalty to worry about.

Another big plus is that FHA mortgage rates are the same in the FHA Streamline Refinance as with a "regular" FHA loans. There's no penalty for being underwater, or for having very little equity.

FHA Streamline : No Verification Of Job, Income, Credit

Another big plus is that the FHA Streamline Refinance is fairly easy for which to qualify.

Earlier this decade, in an effort to help U.S. homeowners, the FHA abolished most of the typical verifications required to get a mortgage. So, today, as it's written in the FHA's official mortgage guidelines :

1. Employment verification is not required with an FHA Streamline Refinance
2. Income verification is not required with an FHA Streamline Refinance
3. Credit score verification is not required with an FHA Streamline Refinance

There's no need for a home appraisal, either, so when you put it all together, you can be (1) out-of-work, (2) without income, (3) carry a terrible credit rating and (4) have no home equity. Yet, you can still be approved for an FHA Streamline Refinance.

That's not as crazy as it sounds, by the way.

To understand why the FHA Streamline Refinance is a smart program for the FHA, we have to remember that the FHA's chief role is to insure mortgages -- not "make" them.

It's in the FHA's best interest to help as many people as possible qualify for today's low mortgage rates. Lower mortgage rates means lower monthly payments which, in theory, leads to fewer loan defaults.

This is good for homeowners that want lower mortgage rates and for the FHA -- but mostly for the FHA.

Are You FHA Streamline Refinance Eligible?

Although the FHA Streamline Refinance eschews the "traditional" mortgage verification of income and credit score, as examples, the program does enforce minimum standards for applicants.

The official FHA Streamline Refinance guidelines are below. Note that not all mortgage lenders will underwrite to the official guidelines of the Federal Housing Administration.

Perfect, 3-Month Payment History Is Required

The FHA's main goal is to reduce its overall loan pool risk. Therefore, it's number one qualification standard is that homeowners using the Streamline Refinance program must have a perfect payment history stretching back 3 months. 30-day, 60-day, and 90-day lates are not allowed.

One mortgage late payment is allowed in the last 12 months. Loans must be current at the time of closing.

210-Day "Waiting Period" Between Refinances

The FHA requires that borrowers make 6 mortgage payments on their current FHA-insured loan, and that 210 days pass from the most recent closing date, in order to be eligible for a Streamline Refinance.

Employment And Income Are Not Verified

The FHA does not require verification of a borrower's employment or annual income as part of the FHA Streamline process.

There is no Verification of Employment, nor are there paystubs, W-2s or tax returns required for approval.

You can be unemployed and get approved for a FHA Streamline Refinance so long as you still meet the other program requirements.

Credit Scores Are Not Verified

The FHA does not verify credit scores as part of the FHA Streamline Refinance program. Instead, it uses payment history as a gauge for future loan performance.

This means that FICO scores below 640, below 620, below 580, and below 500 are eligible for Streamline Refis.

The Refinance Must Have "Purpose"

Streamline Refinance applicants must demonstrate that there's a Net Tangible Benefit in the refinance; a legitimate reason for refinancing.

Loosely, Net Tangible Benefit is defined as reducing the (principal + interest + mortgage insurance) component of the mortgage payment by 5 percent or more.

Another allowable Net Tangible Benefit is to refinance from an adjusting ARM into a fixed rate loan. Taking "cash out" to pay bills is not an allowable Net Tangible Benefit.

Loan Balances May Not Increase To Cover Loan Costs

The FHA prohibits increasing a Streamline Refinance's loan balance to cover associated loan charges. The new loan balance is limited by the math formula of (Current Principal Balance + Upfront Mortgage Insurance Premium). All other costs -- origination charges, title charges, escrow population -- must be either (1) Paid by the borrower as cash at closing, or (2) Credited by the loan officer in full.

The latter is called a "zero-cost FHA Streamline".

Appraisals Not Required

The FHA isn't concerned about home value -- it's insuring your loan regardless.

Therefore, the FHA does not require appraisals for its Streamline Refinance program. Instead, it uses the original purchase price of your home, or the most recent appraised value, as its valuation point.

Homes that are underwater are still FHA Streamline-eligible.

FHA Streamline Refinance Mortgage Insurance Requirements

The FHA Streamline Refinance is an FHA-insured mortgage, and FHA borrowers are required to make two types of mortgage insurance payments -- an upfront mortgage insurance payment paid at closing, plus an annual payment split into 12 installments, paid with your mortgage payment each month.

With respect to mortgage insurance premiums, homeowners using the FHA Streamline Refinance program are split into two classes :

1. Homeowners whose new loan replaces an FHA-backed mortgage endorsed prior to June 1, 2009
2. Homeowners whose new loan replaces an FHA-backed mortgage endorsed on/after June 1, 2009.

Homeowners in the first class -- those with "old" FHA mortgages -- are assigned different mortgage insurance than newer FHA homeowners.

FHA Streamline MIP For Loans Endorsed On/After June 1, 2009

If you are refinancing an FHA mortgage via the FHA Streamline Refinance program and your existing FHA mortgage was endorsed on, or after, June 1, 2009, your mortgage insurance premium schedule on your new FHA loan is as follows.

Upfront Mortgage Insurance Premiums (UFMIP)

For an FHA Streamline Refinance replacing a loan endorsed on, or after, June 1, 2009, the FHA upfront mortgage insurance premium is equal to 1.75 percent of your loan size, or 175 basis points.

This is $1,750 for every $100,000 borrowed. The FHA automatically adds the $1,750 premium to your loan balance for you -- it's not paid as cash. However, not all refinancing households will pay the full amount.

For FHA-backed homeowners refinancing within the 3 years of their existing loan's start date, the FHA provides a refund on your previously-paid upfront MIP.

The size of the refund diminishes as the 3-year window elapses.

For example, a homeowner who refinances an FHA mortgages after 11 months is granted a 60% refund on his initial FHA UFMIP. 30 days later, the refund drops to 58%. After another 30 days, it drops to 56%, and so on.

This is why is rarely a good idea to "wait to refinance" with the FHA. With the FHA Streamline Refinance program, the sooner you refinance, the bigger your refund, and the lower your total loan size. This lowers the monthly payment and preserves the home equity -- two huge positives.

Annual Mortgage Insurance Premiums (MIP)

The annual MIP schedule for an FHA Streamline Refinance which replaces a loan from on, or after, June 1, 2009 is as follows :

• 15-year loan terms with an LTV over 90%: 0.70 percent annual MIP
• 15-year loan terms with an LTV under 90%: 0.45 percent annual MIP
• 30-year loan terms with an LTV over 95%: 0.85 percent annual MIP
• 30-year loan terms with an LTV under 95%: 0.80 percent annual MIP

Note that these MIP costs may be lower than what you're paying currently.

In January 2015, the FHA lowered its mortgage insurance premiums on 30-year loans, making it less expensive to carry an FHA home.

If your current FHA MIP is higher than what's shown above, consider starting a refinance immediately to benefit from a new, lower FHA MIP.

FHA MIP Cancellation Policy

The FHA requires some homeowners to pay mortgage insurance for as long as their loan is in effect.

If your FHA Streamline Refinance replaces a loan from on, or after, June 1, 2009, the rules on your FHA MIP cancellation are as follows:

• LTV of 90% or less at the time of closing: MIP is required for 11 years
• LTV greater than 90% at the time of closing: MIP required for life of loan

The FHA MIP cancelation policy applies to 15-year loan terms and 30-year loan terms equally.

Note that refinancing homeowners are welcome to bring cash to closing in order to reduce their loan balance and change their MIP disposition. However, not everyone will have the cash to make such a move.

This is why, when exploring an FHA Streamline Refinance, you should also look other refinance programs including the conventional mortgage loan via Fannie Mae or Freddie Mac, which is available with nearly every mortgage lender.

The FHA allows its homeowners to refinance to cancel FHA MIP.

FHA Streamline Refinance MIP (For Loans Endorsed Before June 1, 2009)

If your existing FHA mortgage was endorsed prior to June 1, 2009, your mortgage insurance premiums have been "grandfathered".

You can refinance via the FHA Streamline Refinance program and pay reduced rates for both for upfront MIP and your annual mortgage insurance premium.

Upfront Mortgage Insurance Premiums (UFMIP)

For an FHA Streamline Refinance that replaces a loan endorsed prior to June 1, 2009, the new FHA mortgage's upfront mortgage insurance is equal to 0.01 percent of the loan size, or 1 basis point.

For example, if your new FHA Streamline Refinance is for $100,000 mortgage, the FHA will assess a $10 upfront mortgage insurance premium (MIP) to be paid at closing. The FHA automatically adds the $10 payment to your new loan balance.

Annual Mortgage Insurance Premiums (MIP)

Annual MIP is similarly cheap for older FHA loans. For an FHA Streamline Refinance replacing an FHA loan endorsed prior to June 1, 2009, the annual MIP is 0.55% annually, or 55 basis points.

The complete annual MIP schedule is as follows :

• 15-year loan terms with an LTV over 90%: 0.55 percent annual MIP
• 15-year loan terms with an LTV under 90%: 0.55 percent annual MIP
• 30-year loan terms with an LTV over 95%: 0.55 percent annual MIP
• 30-year loan terms with an LTV under 95%: 0.55 percent annual MIP

15-year fixed rate mortgages with LTVs of 78% or less pay no annual MIP.

What Are Today's Mortgage Rates?

FHA mortgage rates are low and homeowners typically close in less than 30 days. Remember: the faster you close, the bigger your FHA MIP refund.

Get a quote today. 

MEASURING THE BREAK-EVEN POINT ON REFINANCING

TWO WAYS TO MEASURE THE BREAK-EVEN POINT ON REFINANCING

According to recently released estimates, over 8 million American homeowners could benefit from refinancing at today’s low interest rates.  Here are three questions to ask yourself in order to figure out if refinancing makes sense for you:

1 – Interest & Cost Benefit:  What would be my interest and cost savings if I refinance into a lower interest rate?
For example, assume you could save $50 in monthly interest expenses if you paid $2,500 in closing costs to refinance.  In this case, it would take you 50 months to break-even ($2,500 costs / $50 monthly savings = 50-month break-even).

When you calculate your refinancing costs, you should include all the closing costs on the new loan, but you should not include the pre-paid interest or pre-paid items that go into your new escrow account.  That’s because you’ll get a refund of whatever is in your existing escrow account after you pay off the current mortgage.  In some cases, the lender may allow you to pay less closing costs in exchange for a slighter higher interest rate.
When you calculate your interest and cost savings, be sure to include the mortgage insurance that you may be able to reduce or eliminate by refinancing.  For example, assume your home value has increased from the time you purchased the home.  The mortgage insurance may be less if the mortgage balance only represents 85% of your current home value vs. 95% of your current home value.

2 – Cash Flow Benefit: How would my overall cash flow situation change if I refinance?
Here are three examples of when it could make sense for you to refinance even if your new interest rate is not that different from your current interest rate:

• Assume you took out a car loan or racked up some credit card balances that carry interest rates that may be higher than current mortgage rates. You may be able to benefit from a debt consolidation refinance.  In this case, be sure to compare your current blended interest rate scenario vs. the new refinance scenario.
• Assume you recently completed some home improvements, or you’d like to make some home improvements in the near future. Trading in your current mortgage for a new one through a “cash-out refinance” may be the way to go.  If you go this route, the IRS gives you a 24-month look back period and a 12-month look forward period to gain the coveted “acquisition indebtedness” tax deductibility status.  For more details, please ask me for my article titled,Three Things You Should Know if You’re Pulling Cash-Out for Home Improvement.
• Assume you have an upcoming large expense where it makes more sense to use a low-interest-rate mortgage vs. paying cash or liquidating other investments. In this case, you could use the funds from a “cash-out refinance” in order to preserve your cash and/or other investment assets.

Please contact me for details on any of these ideas, or to evaluate your mortgage options.

Applying for a Mortgage: 3 Things Millennials Should Do First

Some real estate professionals believe that millennials (18-29 year olds) have little interest in purchasing a home. However, research by the Demand Institute found that about 75 percent of millennials believe that owning a home is an important long-term goal. The reality is that this younger generation faces unique challenges, such as difficulty when it comes to successfully applying for a mortgage. If you’re a millennial, and you’re ready to dive into home ownership, here are three tips to follow before you apply for a mortgage:

1. Deal With Your Credit

Most mortgage programs require a credit check and have minimum FICO score requirements. To see where you stand, check your credit score. You can order your report (from all three major bureaus) for free online. If your score is under 620, you may have difficulty applying for a mortgage.

One cause of low credit scores in younger applicants is the lack of credit history. Millennials tend to use credit less than preceding generations, and it’s understandable that a post-recession generation would shun credit. However, lenders want to be sure that you have some experience managing debt before trusting you with a six-figure loan. You can head off this problem by applying for credit cards about six months before buying a home and using them responsibly.

It’s also acceptable if you don’t have a credit score yet. In that case, lenders are required to manually create a credit report using rent, utility payments and other records. And if your credit is thin, but not bad, having a cosigner may help you be approved for a mortgage.

2. Consider Your Job History

Standard mortgage lending guidelines require applicants to provide at least a two-year job history. For example, here are guidelines from the Federal Housing Administration (FHA):

To be eligible for a mortgage, FHA does not require a minimum length of time that a borrower must have held a position of employment. However, the lender must verify the borrower’s employment for the most recent two full years, and the borrower must explain any gaps in employment that span one or more months.

Self-employed applicants or those whose income is commission-based do need at least two years on the job to qualify in almost any program.

You many not want to quit or change jobs right before applying for a mortgage unless it’s a promotion, in the same field, industry or company, paying as much or more than your previous job.

3. Nail Your Down Payment and Closing Costs

If you’re a first-time homebuyer, there are many programs to help you with your down payment. Many are sponsored by the government and charitable organizations. To find programs in your area, look to the U.S. Department of Housing and Urban Development, which lists many helpful sources for first-time buyers.

You also might be able to negotiate to have the seller cover some, or all, of your closing costs. One thing you should do yourself, however, is save at least two months of reserves. These savings can help you pay your mortgage if you temporarily lose some or all of your income. Even if your lender doesn’t require it (though many do), reserves can prevent foreclosure if you experience a financial emergency.

Before taking the steps listed above, make sure that buying a home is the best option for you right now. Ilyce Glink, award-winning syndicated real estate columnist, advises, “Don’t buy if you’re unsettled about money. It just adds a lot of stress. You may want to rent if your personal life isn’t quite settled. The time to buy is when you know you’re going to be in the same home for at least the next five years.”