Obama Sets a Plan to Help Home Owners Refinance

President Obama urged Congress in his State of the Union speech on January 24th to pass a plan to help millions of underwater home owners refinance into loans with historically low interest rates by charging banks a fee to help expedite the transactions.

"I'm sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates," Obama announced. "No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that it won't add to the deficit and will give those banks that were rescued by taxpayers a chance to repay a deficit of trust."

This isn't the first time Congress considered a proposal to charge banks a fee to help homeowners who remain underwater, but it's not clear from the details Obama provided how similar this plan is to the one Congress has previously looked at.

If you're looking for help refinancing your current loan with your existing lender and have questions, I'd be happy to help!

Federal Reserve to Keep Interest Rates Low Until 2013!

With all that has been going on with our economy, a little bit of good news never hurts! The Federal Reserve last Tuesday announced that they would maintain rates at it's exceptionally low level (near zero) though 2013 to promote on going economic recovery and control inflation. This decision was based on the labor markets nationwide showing little improvement since their last meeting along with slow signs of growth, inflation in the energy markets, and only a slow decline in the unemployment rate.

Applications for U.S. home mortgages rose last week as interest rates fell to their lowest level this year. The turmoil in the stock market has caused a dive in interest rates; we are currently seeing conventional loans at 3.99% and FHA as low as 3.5%.  

What does this mean to you? An interest rate change of 1% equals about a 12% change in buying power, so if you could afford $200,000 loan at 5%, at a 4% interest rate you can now afford a $224,000 loan for the same monthly payment. Even refinancing into a lower rate can save you hundreds in your mortgage payment!

Interest rates are at their lowest point in history and it appears as though we will see them stay at about this level for a little longer. If you are looking to take advantage of this fantastic opportunity to capitalize on the tremendous investment that we have in property ownership, now is the time! Whether you or a friend, family member, or business colleague is looking to purchase or sell to up-size or down-size I can help with that! Even if you just want to refinance to take advantage of these interest rates, I know of several great lender's who can assist that have low closing costs to maximize your savings! Let me know how I can help!

Mortgage Insurance Premiums Rise

Monday (April 5th) marked the increase of mortgage insurance premiums by the Federal Housing Administration. Mortgage insurance premiums on FHA-backed loans will rise to 2.25% of the loan amount from 1.75%. That amounts to an additional $500 for every $100,000 borrowed. On a $200,000 FHA loan, a borrower will now pay $4,500 upfront in insurance costs, compared to $3,500 before. However, these insurance premiums can be rolled into the new loan, just as before.

I see the point of the higher mortgage insurance because the FHA wants to boost reserves and to avoid a possible taxpayer bailout of the mortgage insurance agency. However, this along with other FHA changes this summer (ex. 50% reduction in the maximum amount of seller contributions toward buyer closing costs) and the $8,000 and $6,500 tax credits expiring soon, it’s an abrupt switch from being extremely buyer friendly one month to grandma smacking your hand with a spoon when you reach for seconds.

“Ah-ah-ah, Mr. America. We've stuffed you long enough. You’ve gotten too comfortable and fat. Now we have to limit you and teach you portion control.” With all this money being spent and used to bail out we’re going to be squeezed in the future like a stress reliever man until our eyes pop out. That money the government hands out comes from somewhere, they just want to redistribute it how they see fit.