Sunday, June 3, 2012

MORTGAGE & FINANCE: Mortgage Refinances Increase as Mortgage Rates Hit New Lows

While some people wonder how far mortgage rates can drop, some are taking advantage of a good thing. Mortgage refinance applications increased 13.0% for the week ending May 11th according to the Mortgage Banker's Association's Weekly Mortgage Applications Survey. In fact, 74.9% of all mortgage applications were for refinancing existing mortgages. With government refinances up only 4%, HARP refinances represented 28% and the balance were for conventional mortgage refinances.

When mortgage rates fall, there are usually more borrowers possibly eligible for approval since a drop in rates can cause a decrease in debt to income ratios. HARP applicants continue to increase as more borrowers are learning of this unique opportunity to refinance, often without the need of an appraisal. HARP is fast becoming a very successful mortgage program by helping underwater borrowers refinance to the current record low mortgage's survey of wholesale and direct lenders shows that all mortgage rates, except the jumbo 30 year fixed mortgage rate, dropped by .250% and have hit new lows. Current 30 year fixed mortgage rates are at 3.375%, 15 year fixed mortgage rates are at 2.750% and 5/1 adjustable mortgage rates are at 2.125%, all available with 0.7 to 1% origination fee for borrowers who have maintained a history of good credit.

While some borrowers have chosen to go to their original lender for help, many more borrowers are finding that an online inquiry for a HARP refinance is actually producing better results. This is quickly becoming the better way to obtain aHarp 2.0 refinance, as well as, a traditional mortgage refinance.

Current FHA 30 year fixed mortgage rates are at 3.125%, FHA 15 year fixed mortgage rates
are at 2.625% and FHA 5/1 adjustable mortgage rates are at 2.625%. FHA mortgages for home purchases are still a major choice for first time home buyers because of the low down payments and flexible guidelines. Even though FHA closing costs (APR) are high because of the upfront mortgage insurance premium and other FHA fees, FHA offers various mortgage programs and down payment options which makes a home purchase a little easier for new home buyers.
A popular FHA program, the FHA streamline refinance with no cash out, has always been known for its quick and easy process with no verifications or appraisal. Since there must be a 5% tangible benefit in regards to the proposed mortgage payment, many borrowers were not able to take advantage of this because of increases to the upfront and annual mortgage insurance premiums.

To make this program more accessible to existing FHA borrowers, beginning June 11th, the FHA streamline refinance with no cash out will have reduced upfront and annual mortgage insurance premiums for FHA mortgages endorsed prior to June 1, 2009. It is expected that FHA will have a surge of refinance applications since it is estimated that millions of existing borrowers are eligible for this program. Borrowers have already been actively submitting online applications which is the easiest way to obtain this FHA refinance.

For high end borrowers, there has never been a better time for low jumbo mortgage rates. Current jumbo 30 year fixed mortgage rates are at 4.125%, jumbo 15 year fixed mortgage rates are at 3.125% and jumbo 5/1 adjustable mortgage rates are at 2.250%, all available with 0.7 to 1% origination fee to borrowers who have excellent credit and strong qualifications. Borrowers who have enough assets, steady employment and income are looking at historically low jumbo mortgage rates at this time. Because these are private loans that are held by lenders, borrowers must expect that guidelines are stricter in order to receive approval.

Euro zone financial troubles continue to keep mortgage rates down as investors looked to safer assets this past week. MBS prices (mortgage backed securities) did not have a significant rally, but moved enough to drop mortgage rates, which move in the opposite direction. Freddie Mac's Primary Mortgage Market survey reported that mortgage rates hit record lows again. Housing Starts for April rose 3% which was better than forecasts, although Building Permits fell slightly. Jobless claims came in close to what was expected.

While investors are looking to U.S. data, the situation in Europe has had more of an impact on markets as everyone awaits to see the outcome and if Greece will exit the European Union. Furthermore, the G8 meeting this weekend has not produced any agreements or plans on how to fix this crisis. This week, key housing reports will be released here in the U.S. which may produce some major market movements. surveys more than two dozen wholesale and direct lenders' rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard 0.7 to 1% point origination fee.

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