April 3, 2009 Newsletter

The news is positive for this newsletter. First, fixed thirty year rates are under 5% and appear to be staying in the 4.75-5% range for the time being. Jumbo loans are still above 6% for refinances ( the exception being jumbos below $625,000.00 are in the mid 5s), but there are rumors circulating that some lenders are bringing out more attractive rates for jumbo purchase loans. As we get more information on that front we will pass it along.

As of April 5, the Refi Plus program is being rolled out, with the idea being that if you are an ontime borrower who wants to refi, but the value of your home has dropped, you may be able to obtain a new lower rate with financing up to 105% of the appraised value. All the criteria needs to be sorted out, but the basics are as follows:

  • If your loan is owned by FNMA or FREDDIE, and the loan is at or near the current appraised value, you are a candidate. If you want to check go to www.fanniemae.com/loan-lookup or www.freddiemac.com/mymortgage
  • You can’t have any late payments.
  • You are going from an adjustable to a fixed rate, so the refinance improves the long term affordability of your home.

One drawback is that you cannot refinance and pay off a second mortgage. Since many purchases done in the last five years involved a first of 80% loan to value and a second mortgage of 10-15%, those deals get no relief, unless the holder of the second agrees to subordinate (not likely). The plan does have promise for those who fit the criteria as set forth above.

Realtors sales boards are starting to show some sales. It would appear the worst is over, and with the lower rates and the attractive prices, buyers are starting to look.

As a word of caution, for those who are in the market, and may be submitting a contract on a property which is being sold as a short sale, we advised last year in this newsletter to be patient, the approval by the lender takes time. Make sure when the contract is written, that you allow time for the lender approval, BEFORE, you the buyer have to complete financing, inspections, etc. A recent file we worked on was a contract signed by Buyer and Seller, yet it was contingent upon the lender approving the price and terms. The contract called for the Buyer to have all inspections to be done in 10 days from contract and have financing in 30 days. But when did the clock start? When ratified by the Seller or approved by the lender? Lender approval on short sales often take more than 30 days, so make sure that you the Buyer don’t have to incur expenses for the inspections and loan approval if the lender fails to approve your terms or changes the terms of the deal.

As always, we want to be your title company and law firm. We can advise you on contracts, foreclosure issues or help you find a lender. Call me at 410 884 1160 x3007 or email me at tee.tillman@colonytitle.com.