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In order to try to stem the tide of foreclosures, the Obama administration put a program together called the Homes Affordable Refinance Program (HARP) in 2009. The goal was to help Anchorage homeowners and others who were underwater on their home loans (ie, owed more than what their home was worth) and struggling to make their monthly mortgage payments due to a current financial hardship get through this rough time without losing their home in the process. Unfortunately, with the restrictions that were in place with the original HARP guidelines, not as many homeowners were helped as was hoped for. The administration recently announced that they have made some revisions to this government refinance program in an effort to help more homeowners.
In the original program, Anchorage homeowners couldn’t owe more than 125% of the value of their homes. This eliminated many people who bought their homes during the boom of a few years ago, when prices were rising at an alarming rate and before they began plummeting. Only properties that were the primary residence of the homeowners were allowed to try to refinance under HARP, which meant no investment properties were allowed. Also, homeowners were subject to certain fees when they converted their original 30 year mortgage loan into a shorter term (15 or 20 years mortgages). Homeowners had to pay for an appraisal when they wanted to refinance as well. The original program was set to end in June 2012.
With the new proposed plan, these restrictions are no longer in place. In order to qualify for the Homes Affordable Refinance Program under the current guidelines, Anchorage homeowners must:
- Have purchased their home through Fannie Mae or Freddie Mac before May 31, 2009.
- Be up-to-date on their mortgage payments, with no more than one late payment in the last 12 months and no late payments in the last six months.
- Have originally purchased the Anchorage home they wish to refinance as their primary residence, even if it is not currently the home they live in full-time.
- Never have used the HARP program previously to refinance their home (ie, you can’t get refinancing under HARP more than once).
- Have a loan-to-value ratio of more than 80%.
If you are an Anchorage homeowner who is struggling to keep up with your monthly mortgage payment, you’re not alone. HARP may be just what you need to help you get through this rough patch. And now, with the revisions this government refinance program has received, you may qualify for HARP.
Pauline Hofseth, your Anchorage real estate specialist
Originally posted on my Anchorage real estate blog here: http://activerain.com/blogsview/2584485/government-refinance-program-is-revised.
Did you think that the “no money down” days of home buying were over? Not according to the National Association of REALTORS®. The NAR conducted a study of homebuyers and sellers from 2009 that showed that 20% of all first-time home buyers and 10% of repeat home buyers bought their homes with absolutely no money down (100% financing). Typically, however, buyers are required to come up with around 8% of the sale price to purchase a home in today’s market. Last year, the historically low interest rates and tax credit incentives helped to sell 5.2 million existing homes. With rates remaining low and down payments remaining small, it looks like there may be another 5+ million homes sold this year as well.
What do you need to get a “no money down” loan? Active members of the military as well as veterans are able to qualify for home loans with no money down much more easily than the rest of the homebuyers out there. With programs like the Veteran’s Affairs Home Loan Guarantee Program, active and retired military members can also purchase a home with very little money up front. Additionally, a homeowner that used a VA loan to purchase their home and ends up in foreclosure means that the homeownership reverts back to the VA. Since the VA is not interested in managing homes, they want to sell foreclosed homes as quickly as possible. Usually, the only way to do this is to sell it with no money down.
If you’re interested in finding out how you can buy an Anchorage home with no money down, I’d be happy to talk to you about your options. Just contact me today. While they are definitely not the “norm”, the “no money down” days of home buyer are no over!
I was looking over my recent blogs and found that not even a month ago I asked “Is it Time for You to Refinance?”. When I posted that blog on May 19th, the interest rate was 4.75%. So, homeowners who did not refinance at that time may have missed the boat.
Interest rates have been rising rapidly for the past three weeks. Many states in the lower 48 have already experienced interest rates of 6% and above. Just yesterday, RealtyTimes.com reported that interest rates were going up and no one was predicting how high they will go. Bernard Baumohl of the Economic Outlook Group says that interest rates could go as high as 6.5% in the near future.
After a sudden and rapid rise in interest rates, the interest rates will sometimes fall back temporarily. That must be where we are today because interest rates fell back. Today’s Anchorage Alaska mortgage interest rate is: 5.625%.
Are interest rates headed back up or will they continue to go down? It seems even the experts don’t know for sure. For the past three weeks. all the mortgage alerts have reported that interest rates were going up and IF they fell back, it would only be slightly. All agree that the days of historically low interest rates (4.5%) are gone, most likely forever.
I am not a mortgage lender nor am I an economist but this is what I would have the Anchorage home buyer remember:
* Interest rates affect your buying power to purchase a home at the same payment.
- The move from 4.75% to the current 5.625% has diminished what you can buy by about $15,000.
* Interest rates affect the income required to qualify for the same loan amount.
- The move from 4.75% to the current 5.625% has increased the required income by over $4,000 (gross annual income).
Now is the time to buy:
* Now is the time to buy to take advantage of the buyer’s market in Anchorage.
* Now is the time to buy to take advantage of today’s interest rates.
* Now is the time to buy to take advantage of the first-time home buyer tax credit (escrow must close by Nov 30).
Interest rates were 6.5% a year ago. For eight years before that, they were at the 7% mark. Before that, interest rates were 9% and, at times, in the double digits. Some economic analysts are predicting an inflationary period on the horizon due to the stimulus spending. If that materializes, not only will interest rates soar, but housing prices will increase as well.
Thinking of buying? Now is the time.
In the past two weeks, interest rates began to inch up slightly. This week, RealtyTimes.com reports that today’s interest rate fell back. The current interest rate is 4.75% for a 30-year mortgage and 4.5% for a 15-year fixed rate. That report led to today’s blog. Depending on your current interest rate, it just may be time for you to consider a refinance. If your loan’s interest rate is around 6.5%, a refinance is definitely something you should check into.
* A reduction from a 6.5% to the current 4.75% interest rate would result in a savings of over $200 a month.
If that statement made you perk up your virtual ears, then I would like to remind you about the Making Home Affordable Refinance program sponsored as part of the recovery plan.
* You do not have to be in a distressed situation to take advantage of the program.
Anchorage is one of the places in the nation that the Making Home Affordable program can be of real benefit since our housing has not suffered the steep decline in values that other areas in the lower 48 have experienced. Both Making Home Affordable program and FHA will refinance the loan balance for homeowners who owe more than the property’s current value.
* The Making Home Affordable program will refinance your loan balance if it is no more than 105% of the value of the home.
* FHA will refinance your loan balance if the first mortgage is less than 97% of the homes current value.
If you have equity in your home and pay PMI (Private Mortgage Insurance – insurance lenders require if the home was financed with less than 20% down), the savings could be even greater.
* PMI may no longer be required.
Most homeowners can take advantage of the government refinance loan programs.
* Making Home Affordable Program applies to Fannie Mae and Freddie Mac loans.
* FHA also offers a refinance program.
If you have a first and second mortgage, a refinance could eliminate your second mortgage.
* Make only one mortgage payment and save thousands of dollars in interest.
Check out all your options on the type of refinance which will best meet your circumstances and goals before you make a decision.
* Making Home Affordable Program
* FHA Refinance (even if your current loan is financed through FHA)
* An FHA Streamline (current loan must be FHA loan)
* Conventional refinancing through a mortgage lender
Taking advantage of today’s refinancing opportunities may be a wise decision, but it does depend on your personal circumstance, finances and goals. I do think it is to the Anchorage homeowner’s advantage to check out the possibility of a refinance. When considering a refinance you need to look at your long time goals.
* A refinance is not free. There are fees and points to consider.
According to the various economists and mortgage lenders, interest rates are not expected to decline any lower than 4.5%. However, they are expected to increase as the housing market improves, loan applications increase and the economy recovers.
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