Mar
8


How the FHA Loan Plan Can Help You Refinance

Thursday, March 8, 2012

 

The Obama administration is offering some relief to homeowners who have government-backed mortgages. Under a program President Barack Obama unveiledTuesday, the government would cut the fees it charges to insure those borrowers.
The idea is that lower fees would persuade millions to refinance their loans while interest rates are near record lows. It's the administration's latest attempt to minimize the damage from the foreclosure crisis and help more people keep their homes.
Q: What has the administration proposed?
A: Borrowers with mortgages insured by the Federal Housing Administration could refinance at half the current fee. A lower fee would follow years of rising mortgage insurance premiums. FHA is also reducing an up-front premium when it initiates a loan. The FHA charges the fees on top of standard interest rates because it backs riskier borrowers.
Q: Who's eligible?
A: The administration estimates 2 million to 3 million homeowners. Most are first-time or low-income homebuyers. The FHA requires only a 3.5 percent down payment. And borrowers don't have to prove that they're employed. FHA borrowers can also refinance even if they're "underwater," or owe more on their mortgage than their home is worth.
Q: How much will those who get the reduced fees actually benefit?
A: The fee is now 1.15 percent of the mortgage balance each year. Those fees are unappealing to many borrowers who want to refinance. The plan would cut the fee to 0.55 percent. The current up-front premium would also be lowered, from 1 percent of the loan balance to .01 percent. As a result, a borrower who owed $175,000 on their mortgage could save about $1,750 in one-time fees and more than $1,000 per year in annual fees by refinancing. The borrower could save nearly $150 a month more if the interest rate declined from 5 percent to 4 percent.
Q: Will it work?
A: Possibly, if the reduced fees are well-advertised and borrowers are confident of saving on their mortgage payments by refinancing. If homeowners are wary of paying even a small amount to refinance, the program could fail to reach millions who are eligible. Economists said the lower fees are a modest way to help the troubled housing market but won't turn it around. "The only thing that will do that are low interest rates and job growth," said Susan Wachter, a professor of real estate at the University of Pennsylvania's Wharton School. Stan Humphries, chief economist at the real estate website Zillow.com, predicted that a separate plan to compensate military service members who were wrongfully foreclosed upon would be a big help to that group. It's unclear how many military service members would benefit.
The Obama administration is offering some relief to homeowners who have government-backed mortgages. Under a program President Barack Obama unveiledTuesday, the government would cut the fees it charges to insure those borrowers.

The idea is that lower fees would persuade millions to refinance their loans while interest rates are near record lows. It's the administration's latest attempt to minimize the damage from the foreclosure crisis and help more people keep their homes.

Check out the following questions and answers and if refinancing sounds right for you call me and I can put you in touch with the right people. 425-830-4620

Q: What has the administration proposed?

A: Borrowers with mortgages insured by the Federal Housing Administration could refinance at half the current fee. A lower fee would follow years of rising mortgage insurance premiums. FHA is also reducing an up-front premium when it initiates a loan. The FHA charges the fees on top of standard interest rates because it backs riskier borrowers. 

Q: Who's eligible?

A: The administration estimates 2 million to 3 million homeowners. Most are first-time or low-income homebuyers. The FHA requires only a 3.5 percent down payment. And borrowers don't have to prove that they're employed. FHA borrowers can also refinance even if they're "underwater," or owe more on their mortgage than their home is worth.

Q: How much will those who get the reduced fees actually benefit?

A: The fee is now 1.15 percent of the mortgage balance each year. Those fees are unappealing to many borrowers who want to refinance. The plan would cut the fee to 0.55 percent. The current up-front premium would also be lowered, from 1 percent of the loan balance to .01 percent. As a result, a borrower who owed $175,000 on their mortgage could save about $1,750 in one-time fees and more than $1,000 per year in annual fees by refinancing. The borrower could save nearly $150 a month more if the interest rate declined from 5 percent to 4 percent.

Q: Will it work?

A: Possibly, if the reduced fees are well-advertised and borrowers are confident of saving on their mortgage payments by refinancing. If homeowners are wary of paying even a small amount to refinance, the program could fail to reach millions who are eligible. Economists said the lower fees are a modest way to help the troubled housing market but won't turn it around. "The only thing that will do that are low interest rates and job growth," said Susan Wachter, a professor of real estate at the University of Pennsylvania's Wharton School. Stan Humphries, chief economist at the real estate website Zillow.com, predicted that a separate plan to compensate military service members who were wrongfully foreclosed upon would be a big help to that group. It's unclear how many military service members would benefit.

 






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Estella said
"That is a beautiful shot with very good lighting ." about Women Consider Owning a Home to be a Vital Component of the American Dream
on Sunday, May 12, 2013 @ 9:57 AM

Chris White - Team Leader said
"Unfortunately you are not alone. It's more than an outcry. The powers that be really need to come down harder on Bofa than they already are. Working on these short sale for over 2 years now I've uncovered down right fraud happening on the lenders parts. If they cared more about moving this country forward than protecting their own wallets then they would cut the red tape and approve these short sales in a timely manner. Our team made the wise decision to get BofA loans which were FHA or Freddie Mac backed, approved prior to listing on the market. Then we can list the home as "Price Approved" and close in 30 days. In this instance BofA does a full appraisal, rather than an incompetent "Broker Price Opinion" (nothing against agents but they have no idea how to make adjustments on comparable homes) and then the bank issues an "Approval To Participate" letter which dictates what price we can go on the market and take anything north of 88%. I really do hope your situation improves. " about Congressional Bill to Speed Up Short Sales
on Tuesday, August 30, 2011 @ 9:15 AM

Lisa Zeiner said
"We made an offer 4 months ago to BofA, and have heard nothing. It was a cash offer which is better than the zero money they are collecting now. And since the people don't care they are trashing the place, by the time BofA gets around to it our offer will be gone as the place is a mess!! Septic issues now, garbage being dumnped. All of this could have been avoided if BofA really wanted to correct their cash flow problem and sell these properties in a timely manner. They cry about cash but then do nothing intelligent to fix the problem" about Congressional Bill to Speed Up Short Sales
on Tuesday, August 30, 2011 @ 9:06 AM

Jones Ramirez said
"Thank you for the work you have done into this post, it helps clear up a few questions I had." about How do appraiser’s determine a homes value?
on Tuesday, April 19, 2011 @ 10:07 PM

HollyRobsonf said
"Hey - I am certainly happy to find this. great job!" about Bank of America to Offer Principal Reduction to Underwater Borrowers
on Wednesday, April 13, 2011 @ 6:45 PM