I am a little off topic as we primarily speak about mortgage options here at the HB Mortgage Oracle but this is exciting news for those in the business. Orangetee Realty will be opening their first Orange County office in the City of Costa Mesa in the Metro Point Business Center. Orangetree is set to begin operations in August of 2014. Orangetree Realty has a proven track record of getting their listings sold for listing price or better. For additional information on Orangetree Realty you can visit them at http://www.facebook.com/pages/Orange-Tree-Realty or http://www.otreehomes.com.
How many people really understand what “Tapering” is? When you hear finance person speak of the proposed Fed. Tapering they are speaking of the Federal Reserve and their effect on the financial markets. So how does this affect real estate? Simply put is affects the available low cost money to fund a mortgage. So in order to get a mortgage funded your new mortgage is structured with a higher interest rate to bring in Private Money. This “Private Money” is Wall Street money and frankly, in most cases, our 401K money.
In recent weeks It has been common to see the Mortgage Bond Market moving 60 bases points in a single day. Bases points are a percentage of a single percent. This does not sound like much but when you multiple bases points by your mortgage amount you can see how this adds up quickly. With the large market swings and an unlocked mortgage rate you could see, in a single day, your month payment increase substantially. So simply put higher rates equate to lower approved mortgages or reduced buying power.
When speaking with Michael Gillett of MN Capital I was informed that home buyers buying power is being reduced due to the increasing mortgage rates. Gillett went on to say, with the flood of cash buyers in the real estate market it is difficult to purchase a property today with conventional financing and even worse with FHA financing. With conventional financing an appraisal is required and the loan simply takes time to complete. The cleaner the buyer the faster the loan will be approved. With FHA the property must have everything working at 100%. So simple little things such as a stove, water heater, HVAC unit, that the buyer plans to replace anyway, most be working 100% when the loan funds. So you can see how this could be a huge issue when applied to everything on a property. So an all cash buyer has a huge advantage as they take a property “as is.”
Sandy Cordery of Orangetree Realty indicates that the real estate market is very busy with most properties selling within two weeks once posted on the MLS. Cordery went on to say, the bulk of these deals are all cash buyers. With real estate selling so quickly property values are going up fast and appraisers are having a difficult time appraising a property at a selling price due to all of the historical short sell properties. Short sell properties did allow people to purchase properties under value but they also depressed the values in the same area. Cordery did said that not all areas are seeing equal increases in values in terms of percentage with some areas seeing as much as 30% increase in value over the past six months.
We have a free market system which is still the best way to operate. It will not always benefit everyone but it will benefit most. The more Banks, Mortgage Bankers and Brokers the better rates and terms will be available to the consumer. Do not blindly think that your Bank, Mortgage Banker or Broker will give you the best deal. Shop your rate with at least two of the three. You have to make the monthly payment so get the best deal you can.
You can reach the two interviewed at;
Michael Gillett – firstname.lastname@example.org MN Capital Website – www.mn-capital.com
Sandy Cordery– email@example.com Orangetree Realty Website – www.otreehomes.com
The H.A.R.P., Home Affordability Refinance Program, program offered to Fannie Mae or Freddie Mac mortgage note owners to refinance at today’s lower rates. So simply yes the program works. The program allows for home owners to refinance regardless to your loan to value. The catch is your mortgage most be owned by Fannie Mae or Freddie Mac before May 31, 2009. So who owns your mortgage note?
Most people do not relies that the bank they are paying their current monthly mortgage bill to does not own their mortgage note. Most of the time the bank you make your monthly payment to is acting as a “Servicer” for that actual mortgage note holder. You can do a web search for does Fannie Mae or does Freddie Mac own my loan and follow the steps. If you have a loan match before May 31, 2009 then you are eligible for the program.
Here is the tricky part, you have to find the right Lender to meet your needs. May people get discouraged because they get told their bank cannot do their loan. Well this is correct more times than not. The reason is because not all mortgage lenders offer the program as it is intended. Banks, Brokers or Mortgage Bankers offer programs with what they feel is safe to them. This is very complex but if you think of banks as car deals this makes more sense. For example you would not take your Chevy to the Toyota dealer to get fixed. Yes the people at the Toyota Dealer could get the job done in most cases but not efficiently. So your cost would be much higher than if you just took your car to the Chevy dealer to begin with. The average person simplifies the mortgage process and yes the banks take advantage of this lack of knowledge. Was anyone surprised that Wells Fargo posted huge profits as few months ago? All of the big banks are doing very well in a down economy, imagine that.
So what is the HARP program? The HARP program is a refinance opportunity that allow you to refinance your current loan to a new 30 year fixed mortgage. HARP is not a loan modification. The program does not require you to be late on your mortgage payment and it does not damage your credit score. Frankly if rewards those people that are keeping up with their mortgage payments.
There is only one company that I am aware of that offer the HARP program regardless to your loan to value. It is MN Capital and you can visit them on line at www.mn-capital.com
The HARP program is currently scheduled in terminate on Dec. of 2013. If you are still considering taking advantage of the HARP program then you might want to get moving before the program is over. With the rising real estate values there is little reason for Congress to extend the current HARP program or roll out the rumored HARP 3 program.
I sat down with the Broker of MN Capital, Michael TenEyck, and we discussed the HARP program in detail. We both came to the same conclusion that the media does not explain the program correctly so how is the average homeowner to even know it is an available option. Most people seem to think that the HARP program is a loan modification program or it will damage their credit. That could not be any further from the truth! I will list several points to the program that are the most common misunderstood.
What is the HARP 2.0 Program? The program allows mortgage note holders of Fannie Mae or Freddie Mac the option to refinance their existing mortgage regardless of your current loan to value.
I make my payments to Bank “X” so don’t they own my loan? – Well in many cases the Bank you make your payment to does not own your mortgage note. Many mortgages are owned my Hedge Funds, Fannie Mae and Freddie Mac.
My Bank says I do not qualify do to my LTV – This is very common as many banks have self-imposed restrictions that they have placed on the HARP 2.0 program. As stated above the program does not have loan to value restrictions. Banks provide a service to the actual mortgage note holder as a “Servicer” much like a property manager does if you have every rented a place to live.
So how can MN Capital refinance my mortgage with the HARP 2.0 Program and my bank cannot? – If you are not in the finance business you most likely would not be in a position to understand that banks do not like all loan programs. If you were to think of the banks as Car Dealerships then this makes more sense. For example you would not take your Ford to the Chevy Dealer for repairs. So for my auto metaphor your loan program is your type of vehicle. The difficult part is to fully understanding the proper Lender or Broker that you need to use to max your benefit as there is no sticker price to start from.
Do I need an appraisal? – In most cases no. The loan to value is not a factor for approval but with that said there are some restrictions in terms of rate if your LTV is over 125%. The impact is generally within .125% in terms of rate.
The HARP 2.0 program is only available to property owners with mortgage notes that are owned by either Fannie Mae or Freddie Mac. Currently Congress is working out the details for HARP 3.0 which should open up the program for all property owners. The one unknown is will the current note holders participate in the program. This would require the current note holders to take a reduced return on their investment. As a property owner this sounds great as you benefit from a reduce payment but there is one serious issue. Most of the additional mortgage notes are funded with 401K money. So that right we will experience a reduced return on our 401K investments. So at this time is it unclear how Congress will entice the Hedge Fund Managers to exercise the HARP 3.0 option. Time will tell.
MN Capital has answers to many questions on thier website at – www.mn-capital.com. You can also ask property specific questions at firstname.lastname@example.org.
Many people today do not relies that there are mortgage options available for properties with negative equity. I recently spoke with the Broker of MN Capital, Michael TenEyck, and was surprised to learn that a home value is irrelevant when refinancing with the HARP 2.0 program. Many Lender’s will tell you otherwise as they have self-imposed loan to value limitations within guidelines. TenEyck gave me two examples of HARP 2.0 loan that MN Capital has recently closed which I will share below;
Owner Occupied property
- Homes Value – $225,000
- Loan amount – $340,000
- Current Loan to Value – 151%
- New Loan – 30 Year Fixed at 4.25%
- Homes Value – $230,000
- Loan amount – $315,000
- Current Loan to Value –136%
- New Loan – 30 Year Fixed at 4.50%
The above loan structures are deals that I have not seen done by any other Lender to date. The HARP 2.0 loan program only has a few qualifying requirements. Your loan must be owned by Fannie Mae or Freddie Mac prior to June 1st of 2009. You will need to meet forgiving debt to income and credit ratio requirements for the HARP 2.0 program. There are a few other items needed to qualify but those are the two major items. To find out if your loan is owned by Famine Mae or Freddie Mac click on the below links and follow the instructions. Do not be fouled thinking that your loan is owned by a major bank because you make your payment to them. Banks today, in many cases, act much like a property manager does when you rent an apartment but that is a topic for a later date. It only takes a few minutes to find out and the reduce mortgage rate could benefit you greatly.
Fannie Mae – http://www.fanniemae.com/loanlookup/
Freddie Mac – https://ww3.freddiemac.com/corporate/
If you have spoken with your lender and they told you they could not help you due to your debt it income, loan to value or if you have existing mortgage insurance then MN Capital might be able to help. I asked the mortgage insurance question of the broker and the answer was clear. If you have mortgage insurance before the HARP 2.0 refinance then you will have it after. If you do not currently have mortgage insurance before the HARP 2.0 refinance then you will not have mortgage insurance with the new loan. There are even a few ways to eliminate mortgage insurance after you refinance with the HARP 2.0 program. You would have to speak with the Broker to get your individual details as it is different with ever borrower.
You can reach MN Capital online at – www.mn-capital.com