Low interest rates and new loan programs abound this spring, so if you assumed your refinancing and mortgage options were dismal, you’ll be surprised by these three offerings.
1. Refinance with new FHA fees : FHA raised insurance premiums for new borrowers, while lowering fees for some existing customers who refinance, making comparison shopping with private mortgage insurance worthwhile.
The details: FHA’s new insurance premium rates include a great deal for existing FHA borrowers — you can refinance by paying a miniscule .01% upfront fee and an annual premium of just .55% starting June 11. The catch: The deal is only for home owners who got their FHA mortgage on or before May 31, 2009. The latest FHA deal for new FHA customers buying homes isn’t nearly as sweet. You’ll pay a whopping 1.75% upfront fee and an annual premium of 1.25%. For a $200,000 loan, that’s $3,500 for the upfront premium payment and $2,500 for the annual premium.
2. Refinance underwater mortgage: If you owe more than your home is worth, you may finally be able to refinance into a lower rate thanks to the government’s HARP refinancing program. You can take advantage of historically low interest rates by using the latest version of the Home Affordable Refinance Program. The HARP program even works if you’ve been hit by the economic double-whammy of a falling family income and a falling home price. You qualify for a HARP refinance if you have income coming in and you’ve made your mortgage payments on time every month for the past six months and have no more than one late payment in the past year. Caution…Banks can layer their own tougher rules on top of the HARP requirements, and they’re not obligated to let you use the program to refinance your existing loan.
3. Refinance rental properties: Some real estate investors have new loan options for the first time in years. In recent years, small landlords like me have had a tough time finding a bank to finance more rental property purchases. Once you had more than four rental property loans, Fannie Mae and Freddie Mac were no longer willing to guarantee your loans, even when your credit scores were top-notch and the property was able to turn a profit from day one of ownership. Only Fannie Mae has made this change. (It’ll purchase up to 10 loans from any one investor.) Freddie Mac is still limiting single-family landlords to four loans. Most banks discount your rental income by 25% when making investor loans, which adds up when you have multiple properties. (Houselogic 4/25/12).