Monday, March 12, 2012

Home Mortgages and Refinancing

In this video Andrew L. Parker with RE/MAX Metro Realty and Craig Walker with Cascade Mortgage discuss home mortgage interest rates, refinancing a home, Fannie Mae, Freddie Mac, and refinancing a with second mortgage.

Home mortgage interest rates are currently hovering around 4% to 4.25% for most borrowers. Current and future rates are based on the value of mortgage backed securities. When economic data is weaker than expected bond prices typically move up and interest rates go down. When economic data is stronger than expected bond prices typically move down and interest rates go up. Rates will very week by week and day by day.

Refinancing a Fannie Mae or Freddie Mac loan tends to be straight forward, even if the loan to value (LTV) is at or is slightly above 100%. New mortgages with a LTV of over 80% will not need mortgage insurance with these programs.

On March 12th and 19th, 2012, the loan to value limit of Fannie Mae and Freddie Mac loans will be expanded to unlimited. Which means a home owner with a loan to value of over 100% will be able to refinance.

If a home has a second mortgage when a borrower wants to refinance the first, the second would need to become subordinate to the new first. Meaning it would need to remain in second position. If the lender holding the second will subordinate, it will need to be paid off.

Currently there are no programs to help home owners who want to refinance a home loan that is not backed by Fannie Mae or Freddie Mac. President Obama proposed giving relief to these homeowners in his State of the Union Address, but there is no help until it is put into law. To refinance there would need to be a LTV of 80% based on an appraisal of the home. There are programs available to refinance with a LTV of up to 95% but mortgage insurance is required.

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