Have you been thinking about refinancing your home and not sure if you want to go through the hassle? Not sure what to expect or afraid you won’t qualify? These questions are the typical questions facing home owners today and I am sure the major reasons they decide to procrastinate. But if you think about it, how long will it take out of your day to make that simple phone call or complete a refinance questionnaire? The answer is about 10 minutes, that’s shorter than a Geico phone call and could save you far more money. We know you don’t this everyday so we try our best to make it as smooth as possible for you and answer all the questions you have. So let’s to answer some of your questions in this post.
2015 has started with interest rates back in to the historic low levels with rates in the mid 3’s for 30 year fixed rate loans. If that is not enough the government has lowered the FHA monthly mortgage insurance rates by .5%. So a typical FHA loan that was taken out this time last year with an interest rate of 4 % with a loan balance of $250,000 would be a saving of $140 a month and all you would have to provide is a current mortgage statement, your home owner’s insurance policy, and a copy of your Note. That is all you would need, no income verification, no bank account verification, no appraisal. This is called a FHA Streamline Refinance by clicking on it will take you to the detail page. The FHA Streamline loan only works when you have an existing FHA loan. If you are a veteran, and have a VA loan on your home, the VA has a similar program called an Interest Rate Reduction Refinance Loan or IRRRL. If you have a FNMA or FHLMC loan (a conventional 30 year fixed) the similar type of program would be the HARP program. The HARP program or the Home Affordable Refinance Program is really designed for those home owners that owe more than their home is worth and wish to lower their monthly payments. If you have equity in your home with a conventional loan on it, you would need to fully qualify again for a new loan.
So what do you need worry about? Nothing, the initial consultation with a MAE Capital Mortgage’s loan officer is free. Over the phone or by completing a simple refinance form online we will get some basic information and formulate the best possible scenarios for you. We will tell you if it is worth your time to do a refinance before you have to gather anything. The information you send us, either online or over the phone, is secure and will not be used for spam or any other kind of mass marketing. People have become wary of filling out anything online for fear they end up on some spam list that they can’t get rid of, that is simply not the way we want our clients treated.
What do you need? If we are not doing a FHA Streamline you will need to gather your Federal income taxes for the last 2 years and W2s, your current mortgage statement, your home owners insurance declaration page, bank statements for the last 2 months, and your last 30 days of pay statements. Will do the rest for you, like open escrow, order an appraisal and process the paperwork. It does not matter who your existing lender is, we are completely refinancing that old loan and you will have new mortgage company that you will make your payments to. You might ask if it would be better to go to your existing lender to refinance your home, and in most cases it is no better and in some cases, I have seen the existing lender charge more and you end up with a slightly higher interest rate. It is always good to get a few quotes, but make sure you talk with someone who can actually give you an accurate quote. The interest rate on your new loan is based on several variables such as equity, credit score, loan program, and whether you are taking cash out to pay off a second mortgage or other debt. So it is always best to have the rate calculated for you based on your situation. Lenders and Brokers all have to go to the same places to get the rates for you, so rates should not vary that much from lender to lender, but the fees charged can.
So what happens when once you decided to start the process? Once you have supplied the paperwork we have requested, we are tasked with providing you with disclosures that spell out all the charges and the payment on the new loan. We will go to an Escrow or Title Company and order a preliminary title report to make sure there are no liens on the property that you did not know of. We will order the appraisal (if necessary). We will do all the necessary verifications of your employment, credit, and assets (if necessary). Once we have everything back we submit the file to underwriting. When the loan is approved we draw the loan documents and send them to the Escrow or Title Company and have you sign them. Most of the time we can arrange that you sign in our offices, if that is more convenient, or we can have a notary come to your home, or you can go to the Escrow or Title Company to sign them. Once you sign the documents, they are set back to the lender to be reviewed. Then the new loan is funded and the old loan is paid off through the Escrow. You new first payment will be the following month.
What will this cost me? In most cases we make the new loan where you have no out-of pocket expenses. This is done either within the interest rate you decide to take or included in the loan amount or both. This is done upfront before you make a decision to refinance and is part of the analysis we do to make sure it will be a good investment to refinance. A general rule I like to follow is to find out how long you plan on being in the home and fit the loan that plan. An example would be if it costs $5,000 to refinance, either included in the loan or paid in cash, and you save $250 a month in your payment, it will take 20 months to recoup that amount to make it worth the refinance. But if you plan on selling your home in that time frame it is not worth it. On a FHA Streamline the loan amount can’t be raised so the analysis is easy, if you save money it is worth it to do.
So how do you get started? Well that is easy simply give us a call, it is free, and could save your thousands of dollars. Our phone number is (916) 672-6130 or Click Here and fill in the simple questions and we will contact you. We can only refinance California properties as that is where we are licensed to do business.
Do you have a FHA loan on your home? It might just be the right time to refinance that mortgage. As of January 26, 2015 the Federal Housing Administration will be lowering the monthly mortgage insurance rates by .5%. This may not sound like a lot but it does reduce your mortgage payment even if you don’t change your existing interest rate. If you took out a 30 year fixed FHA loan after June 1st 2009 you are paying 1.35% annually for your FHA mortgage insurance. As of January 26, 2015 FHA will be accepting new 30 year fixed rate loans with mortgage insurance of on .85% or less.
At the same time interest rates are hitting historic lows again so this is the perfect time to lock into a low rate and reduce your mortgages insurance. On January 9, 2015 the Federal Housing Administration came out with Mortgagee Letter 2015-01 which state the guidelines lenders must follow for the new lower MIP rates. The letter address when it is to take effect (January 26,2015) and how lenders can re-issue case numbers for clients they already have in process. The letter also gives the new MIP rates for both 30 year loans and 15 year FHA loans. The 15 year MIP rates have stayed the same but the 30 year MIP rate have all been lowered by .5%. With the new rates in the table below:
Term > 15 Years
Base Loan Amt. LTV Previous MIP New MIP
= $625,500 = 95.00% 130 bps 80 bps
= $625,500 > 95.00% 135 bps 85 bps
> $625,500 = 95.00% 150 bps 100 bps
> $625,500 > 95.00% 155 bps 105 bps
Term = 15 Years
= $625,500 = 90.00% 45 bps 45 bps
= $625,500 > 90.00% 70 bps 70 bps
> $625,500 = 90.00% 70 bps 70 bps
> $625,500 > 90.00% 95 bps 95 bps
bps=basis points which are a fraction of a percentage. Example 80bps= .8% so a $100,000 loan amount would have an annual MIP of $800 or /12 $67 a month with the new MIP figures lowering the monthly payment from $109 a month a savings of $42 a month.
As you can see the reduction in the Mortgage Insurance can be significant and increases with higher loan amounts. So if you have a $300,000 FHA mortgage on your home you took out last year and your loan to value was greater than 95% (you bought the house and put 3.5% down) your monthly mortgage insurance payment is $337 a month if you were to refinance your new mortgage insurance payment would be $212 a month a savings of $124 a month in your payment. That would be worth the effort to refinance your mortgage in itself. Well if you took out your mortgage this time last year you may have a an interest rate of 4.375-4.875% with rate today in the 3.5-3.875% you would also see a savings in the lower rate as well.
Let’s do an example of a refinance of a home that was bought January of 2014 and say you have a $300,000 loan amount. And an interest rate of 4.5%. We already did the number for the reduction of the FHA Mortgage Insurance of a savings of $124 a month. The new interest rate at 3.75% will save another $130 a month for a total of $254 a month that is $3,050 a year. So if you have been considering a refinance now is the time.
If that has not convinced you to refinance and you think it will be a big hassle let me entice you with another little known fact. FHA has a program to refinance your home that does not require an appraisal or income verification. It is call a streamline refinance. We have a whole page on the Streamline Refinance but I will give a quick overview. The basics of the streamline are that you have made your mortgage payment on time for the last 12 consecutive months and you have an FHA insured mortgage. Then all we do for you is prepare the FHA loan paperwork. You provide us your current mortgage statements and a copy of your home owner’s policy and a copy of the Note, and we do the rest. You don’t even need to have good credit, although it will help with the interest rate. We can even refinance your non-owner occupied FHA loan with Streamline Refinance.Now you may ask what it will cost you to do this. The answer is we tailor make the loan so that you have no out-of-pocket expenses. That's right you don't have to pay any additional costs to lower your mortgage payment. With FHA Streamline loans your loan amount can't go up either, we pay the fees for you. You do have the option to pay fees and reduce your interest rate even further, but in most cases that is not cost effect to do. We run the numbers for you so you can make the decision on paying fees or not. It does not matter who your existing lender is or who did the loan for you originally we take care of everything for you and we are paid from the lender who buys the loan. Oh, by the way, as a Mortgage Broker we get wholesale interest rates and pass those savings on to you.
Let us help you today click here and complete the form or call us to get the ball rolling. Our number is 916-672-6130 we are licensed to lend on California properties, we hope this information was helpful.