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Have You Seen Your Refi and Mortgage Options Lately? Three good reasons to warm up to a refinance this spring.

Lmortgage-rates2-300x249ow 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
In a  nutshell: FHA raised  insurance premiums for new borrowers, while lowering fees for some existing  customers who refinance, making comparison shopping with private mortgage  insurance worthwhile. Mortgage insurance covers the lender against losses caused  when borrowers stop making payments.
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% if you got your original loan on or before May 31, 2009.
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 1.35% — more if your loan is more than $625,500. For a $200,000 loan, that’s  $3,500 for the upfront premium payment and $2,700 for the annual  premium.
If you can meet the tougher underwriting and higher downpayment  rules of private mortgage insurance companies, check to see what that would cost  for your  specific loan and location using calculators from such sources as MGIC, Radian, or Genworth Financial. Use the calculators to  check how your payment would change depending on how much equity you have in  your home.
2. Refinance underwater  mortgage In a nutshell: 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.
The details: You can take  advantage of historically low interest rates by using the latest version of the Home  Affordable Refinance Program, which removed a previous cap on how far below  your mortgage your home value can be.
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.
  • 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.

The catch: 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
In a nutshell: Some real estate  investors have new loan options for the first time in years.
The  details: 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.
Now, some banks participating in the  HARP program are taking applications from landlords with multiple properties and  lots of mortgages. HSBC recently agreed to look at a mortgage on a property I  own in Baltimore. My current interest rate there is over 7% and if I get the  HARP refinance it will fall to 4.6%.
It’s too soon to say whether the  banks will actually fund me or any other landlord who wants to refinance.
The catches

  • 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.

But, the fact that banks are accepting applications from rental property  owners is a sign the credit spigot may be reopening for creditworthy real estate  investors.

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