New Lending Guidelines!

Lenders are beginning to accept applications under the new HARP 2 rules – there is no loan-to-value limit on HARP refis for borrowers who have fixed-rate mortgages (if you are underwater this is GREAT news).

Here is a brief overview of HARP 2’s guidelines:

· 1. The program is for borrowers whose mortgages are owned by Fannie Mae or Freddie Mac, and who got their loans before May 2009.

· 2. HARP had been scheduled to expire at the end June 2012; HARP 2 extends the expiration to the end of 2013.

· 3. There is no loan-to-value cap anymore for borrowers who now have fixed-rate mortgages.

· 4. For borrowers with ARMs, the loan-to-value cap remains 105 percent.

· 5. Borrowers can qualify for HARP 2 refis if they have paid on time for the last six months and have no more than one 30-day late payment in the last 12 months.

· 6. Fees have been reduced. Under HARP 2, the fees are reduced to zero percent on loans for 20 years or fewer, and 0.75 percent for mortgages for more than 20 years and for ARMs.

I wanted to remind everyone about our current refinance fund raiser for VW and the Dad’s club. For the month of February, I will donate $250 in the name of the family refinancing with me to the non-profit of their choice. $250 went to the Dad’s club this week in honor of a local VW Family, the Dad’s club and all thank you!

Please give me a call if you have any questions or if I can help with your financing needs!

Mortgage Market

Mortgage markets improved last week on a weak jobs report, expectation for new market stimulus, and growing evidence of a global economic slowdown. Overall, conforming mortgage rates in California improved for the first time in 3 weeks. On a product-by-product basis, though, mortgage rates are faring differently. According to the Freddie Mac weekly mortgage rate survey last week, the 30-year fixed rate mortgage was unchanged but the 15-year fixed rate mortgage and the 5-year ARM fell.

The great news is that the 5-year ARM is at a new all-time low for qualified borrowers!

A drop in 5-year ARM rates throughout California without a corresponding drop in 30-year fixed mortgage rates signals that markets expect the economy to stabilize over the long-term but with weakness in the near-term. The 5-year ARM’s ultra-low rates suggests marked weakness ahead. The 5-year ARM may get another boost this week, as well.

While U.S. markets were closed for Labor Day, Eurozone nations were hit with a new wave of sovereign debt concern, this time centered on Italy. Greece, Portugal and Ireland have already been the subject of debt default debate this year. Italy’s inclusion hit equity market hard and safe-haven buying re-commenced. This should give a good start to mortgage rates this week. Look for rates to start lower. That’s not to say, however, that they’ll finish the week lower. With very little economic data due for release, markets will move on momentum and momentum can change at any time.

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