There are two new programs aimed at helping homeowners refinance their loans into the current low mortgage rates.

For conventional loans (Fannie Mae and Freddie Mac), HARP 2.0 extended guidelines to the existing DU Refi Plus program.  We can now refinance an owner-occupied property regardless of the current value of the home!  Investment properties and 2nd homes can be refinanced to 105% of their value.  Mortgage insurance is NOT added to the loans.  We still need to verify income and credit scores, but this gives many people the opportunity to refinance their loans that until now have not been able to due to declining values.  You can check if your loan is a Fannie Mae loan by going here: http://www.fanniemae.com/loanlookup/

FHA loans have also been updated by HUD.  One big road block we’ve faced when doing FHA streamline refinances is the increase in mortgage insurance premiums and having to pay the up-front mortgage insurance.  Before the change, borrowers that had monthly MIP of .55% would see that fee increase to 1.15% and borrowers had to pay 1% up-front.  The new guidelines state that loans that have .55% monthly MIP rates can stay at .55% and the up-front charge has been effectively eliminated.  As with all streamlines, we do not need an appraisal to complete the refi.

Both of these programs can be used to help borrowers refinance loans on homes that have lost equity.  In order to participate in either of these programs, the exisiting loan must have originated prior to June 1st, 2009.

HUD has really done it to us again.  We have used FHA financing to give a lot of people access to the low-priced housing market in the past few years.  HUD charges borrowers an upfront MI (mortgage insurance) fee as well as an annual MI fee.  Currently, those rates stand at 1% upfront and 1.15% annual.  That means on a $200k purchase at today’s 3.75% 30-year fixed interest rate, the upfront MI charge would be $2000 and the EFFECTIVE interest rate would be 4.9%.

In April, those rates are going up.  The upfront MI will be 1.75% and the annual MI will be raised to 1.25%.  And there is talk that those rates may increase AGAIN in June!  This is not typical loan marketing fluff you hear on the radio…this IS GOING TO HAPPEN.  So if you are thinking about purchasing a home using an FHA loan, or have the potential to do an FHA steamline refi., March is the month to make it happen.  Please do NOT wait until the end of the month to make your move…HUD’s case number system will be overloaded and you may miss out.  Remember, an FHA case number is good for 6 months, so even if you are thinking about obtaining an FHA loan, get that case number now so that you can be grandfathered into the current MI rates.