According to a recent report by Zillow, 27% of all homeowners are “underwater” on their mortgage. 

Being “underwater” or upside-down on your mortgage means that you owe more money on your mortgage than your home is worth. 

In some markets the numbers are even uglier.  More than a third of Chicago homeowners owe more on their mortgage than their homes are worth.  In Atlanta over 50% of homeowners are “underwater”.

And those numbers don’t include the homeowners whose current equity is between 0% and 20%.  Many people have purchased homes with a 20% down payment to avoid paying PMI (Private Mortgage Insurance) only to have their homes fall in value resulting in their inability to refinance at lower rates without paying PMI.

The surplus of existing inventory on the market, the current foreclosure moratorium, and falling prices are the reasons that home values have decreased across the country.

Some experts say that we are getting closer to the bottom.  Obviously!  The question is, “Just where is the bottom?”

The good news for some homeowners is that the government has extended the HARP program until June 30, 2011.  HARP stands for Home Affordable Refinance Program. 

You may qualify for the HARP program if you have a conventional (under $417,000) Fannie Mae or Freddie Mac mortgage and are not currently paying PMI.  If that is the case, you may be able to refinance at or close to the historically low mortgage rates now available, without paying PMI, even if you owe 25% more than your home is worth.  If you have two mortgages or an equity line that would have to be included in the refinance you would not qualify.

We can quickly determine whether or not you qualify for the HARP program.  If you have an adjustable rate mortgage or a fixed rate mortgage  with a rate that is higher than the currently available low rates, you should check to see if you qualify for the HARP program.

Posted by Terry Brunner.  Terry is a Senior Loan Officer with Horizon Financial.  Terry can be reached toll free @ (877) 627-9211 x150 or email TBrunner@HorizonFinancial.org.  Visit Horizon’s website at www.horizonfinancial.org

Posted by Terry Brunner.  Terry is a Senior Loan Officer with Horizon Financial.  Terry can be reached toll free @ (877) 627-9211 x150 or email TBrunner@HorizonFinancial.org.  Visit Horizon’s website at www.horizonfinancial.org

Mortgage rates for the last few months have been extremely low.  Fixed, Adjustable, even Jumbo mortgage rates have fallen to levels never seen before.  

Unless you have refinanced in the last few months, it wouldn’t hurt to see if you can improve your mortgage situation.  You may be able to do a “No Cost” loan and reduce the term of your mortgage by several years with a payment that is the same or lower than your current payment.

But be forewarned, if you do decide to refinance, be prepared for a longer than normal loan process.  Loans that took less than 30 days to complete several months ago, are now taking 30 to 60 days to complete.  But it is certainly worth the wait if you can save some money and improve your current situation.

 Posted by Terry Brunner.  Terry is a Senior Loan Officer with Horizon Financial.  Terry can be reached toll free @ (877) 627-9211 x150 or email TBrunner@HorizonFinancial.org.  Visit Horizon’s website at www.horizonfinancial.org

Jump back to January of 2008.  If you had a middle credit score of 700 and a loan-to-value ratio of 80% or under, you would qualify for the very best mortgage rate.  You were perfect!

Not anymore.

By April of 2008, Fannie Mae and Freddie Mac imposed Loan Level Pricing Adjustments (read…Penalties) for credit scores below 740 and LTVs over 60%.

There are also additional Pricing Adjustments imposed on Cash-Out loans (when more than one mortgage is being refinanced or cash is being taken out of a refinance).

Mortgage rates are advertised based on the “perfect” customer in a “perfect” scenario.  Don’t be surprised if you are offered a mortgage rate that is higher than advertised rates if your credit score or loan scenario doesn’t fit the “perfect” model. 

Posted by Mike Owens Partner/Mortgage Planner with Horizon Financial. Inc.  You can reach Mike at MOwens@HorizonFinancial.org or at (864) 907-2678

Adjustable rate mortgages or ARMs can be a wonderful mortgage tool or they can be downright ugly.

ARMs typically come in flavors such as the 3/1, 5/1, 7/1 or 10/1.  The first number is the number of years that the initial interest rate is fixed.  The second number means that after the initial fixed rate period ends, the interest rate can change once a year.

ARMs have caps, typically 5/2/5.  The first number means that the interest rate can go up 5% in the first adjustment after the fixed rate period.  The second number means that the interest rate can go up a maximum of 2% per year after the initial adjustment.  The third number means that the interest rate can only go as high as 5% over the initial fixed rate.

So, if you have a 5/1 ARM with 5/2/5 caps and an initial fixed rate of 4%, the interest rate could go up to 9% at the very first adjustment after 5 years.  But if the ARM rate only went up to 6% after the first adjustment, the rate could only increase by 2% in the second adjustment to 8%. And the rate could never go above 9%.

ARMs can be a great mortgage tool if you are planning to pay off your mortgage or move within the fixed rate time frame.  Rates on 5/1 ARMs are below 4% at this moment.

If you are not planning to move or pay off your mortgage within the fixed rate time frame, ARMs can pose a big risk.  With the U.S. Government spending money as fast as they can print it, mortgage rates are going to go up in the near future.  And rates are probably going to go up dramatically.  If you are in an adjustable rate mortgage and are not planning to move or pay off the mortgage, it would probably be wise to refinance into a fixed rate mortgage while rates are low.

And now for the ugly.  If you have an Option ARM and have been paying the minimum payment, you probably have a negative amortization loan, meaning that the amount of principle that you owe is increasing every month.  You are either underwater or sinking fast.  Refinance if you can, as soon as you can.  

Posted by Terry Brunner.  Terry is a Senior Loan Officer with Horizon Financial.  Terry can be reached toll free @ (877) 627-9211 x150 or email TBrunner@HorizonFinancial.org.  Visit Horizon’s website at www.horizonfinancial.org

Posted by Terry Brunner.  Terry is a Senior Loan Officer with Horizon  Financial.  Terry can be reached toll free @ (877) 627-9211 x150 or   email TBrunner@HorizonFinancial.org.  Visit Horizon’s website at www.horizonfinancial.org

Having chosen South Carolina as your home, you’re now ready to find the cheapest first, second, or refinance mortgage rates available. The process of finding and comparing low-cost mortgages can be summarized into the following steps:

• Learn the options.
• Know the rates of interest.
• Determine your budget.
• Collect quotes.
• Compare your offers.

Horizon Financial is here to help. Our content is informative, and our information is accurate. You can request free quotes online, crunch numbers on the mortgage calculators, or calling Horizon Financial directly.  Take advantage by using our thorough South Carolina broker/lender mortgage loan programs knowledge to get the mortgage loan that is right for your situation.  Whether you are just starting to research or have a written offer on your dream home, we have Conventional, FHA, VA & USDA Rural Housing expects ready to assist with your hassle free options.

Posted by Bob Dangelo, a senior Loan Officer with over 20 years mortgage lending experience.  You can reach Bob toll free at Horizon Financial (877) 627-9211 ext 110 in Greenville, SC 864-527-8900 ext 1100 or email at bdangelo@horizonfinancial.org

The reason Fannie Mae has started its Loan Quality Initiative is to improve its loan pool’s performance.    

Better loan quality should help keep conforming mortgage rates down, while reducing the taxpayer’s burden for foreclosures. Unfortunately, it’s also going to lead to more mortgage denials and a lot of busted purchase closings. Therefore, be extra careful with your credit between the date of application and the date of closing. If you must buy something “big”, consider paying cash.  Anything that goes on a card can be used against you as grounds for revoking your approval. Even if your loan is underwritten and ready to close.   

What the bank will do: Look at the Credit Inquiry section of your credit report to look for “non-disclosed liabilities”. If items are found, the bank will ask for supporting documentation on the inquiry, and will use the information to re-underwrite your mortgage.

What you should do about it: Don’t go looking for new credit until after your loan is funded.  Period.  Now re-read the prior sentence, please, to help it sink it.

 For help with your mortgage approval, or questions about the Loan Quality Initiative, let us explain your options in easy terms.

Posted by Bob Dangelo, a senior Loan Officer with over 20 years mortgage lending experience.  You can reach Bob at Horizon Financial (877) 627-9211 ext 110 or email at bdangelo@horizonfinancial.org.

God Bless Our Troops And Veterans!

Posted by Terry Brunner.  Terry is a Senior Loan Officer with Horizon Financial.  Terry can be reached toll free @ (877) 627-9211 x150 or email TBrunner@HorizonFinancial.org.  Visit Horizon’s website at www.horizonfinancial.org

The Dead Cat Bounce is a Wall Street term that refers to a brief recovery in the price of a declining stock, bond, security or market. The term is derived from the concept that “even a dead cat will bounce if it falls from a great height”. This phenomenon may apply to the mortgage bond market in the near future.

First of all, remember that when bond prices go up, rates go down. When bond prices fall, rates go up.

In the latter half of 2008, 30 year rates moved in a range from 5.875% to 6.5%. 15 year rates moved in a range from 5.75% to 6.125%. That is until November 25th, 2008. On that day the U.S. Federal Reserve Board announced that it would initiate a program to purchase mortgage backed securities from Fannie Mae and Freddie Mac, artificially propping up the prices of bonds and keeping interest rates low. The very next day rates on a 30 year fixed went down to 5.125% and ensuingly headed further south.

Over the last year and four months, the massive purchases (1.25 trillion dollars worth) of mortgage backed securities by the Federal Reserve have kept mortgage bond prices up and interest rates down. The 30 year rate has fluctuated between 4.5% and 5.25%, while the 15 year rate has moved in a range from 4.25% to 4.875%.

Now the bad news. The Federal Reserve has officially stopped buying mortgage backed securities as of March 31st, 2010. Mortgage rates have started to move up. While there may be some short term volatility, some experts expect rates to rise by 1% this year.

If you need to get out of an adjustable rate loan, or would benefit by refinancing, this may be your last chance to do so at a great rate.

And lets hope for the “Dead Cat Bounce” or bounces. Because this cat is officially DEAD!

Posted by Terry Brunner. Terry is a Senior Loan Officer with Horizon
Financial. Terry can be reached toll free @ (877) 627-9211 x150 or
email TBrunner@HorizonFinancial.org. Visit Horizon’s website at www.horizonfinancial.org