Tag: no appraisal

How to Get Rid of Mortgage Insurance

How to Get Rid of Mortgage Insurance

So you want to break up with your monthly mortgage insurance—we don’t blame you! When you purchased your home, there’s a good chance you didn’t have 20% to put down, right? Mortgage insurance is a great option, in that it allows buyers to increase their purchasing power, but comes with an unfortunate side effect of additional monthly fees.

Every situation is different, so it is important to understand your loan, to determine your options for dropping your mortgage insurance. Below are the greatest factors affecting your ability to say “Sayonara” to your mortgage insurance (MI).

• Type of mortgage insurance you’re paying
• Which lender holds your loan
• Age of your loan (time since closing)
• Your loan-to-value ratio (LTV)
• The property type
• Whether or not your property value has increased

Types of Mortgage Insurance

If you’re paying a monthly fee on a conventional loan, it is called private mortgage insurance (PMI). If you paid an upfront fee at close and a monthly fee on an FHA loan, it is called a mortgage insurance premium (MIP).

Who Owns Your Loan?

If you have a Conventional loan, is it Fannie Mae or Freddie Mac? This is important because they have different rules for when MI can be removed. If you have an FHA loan, you will need to know its age and the percentage of down payment you gave at close.

What is Your LTV?

The Loan-to-Value ratio is essentially the financed amount divided by your home’s value, expressed as a percentage. Let’s say for example that you purchased your home for $200,000 with 10% down ($20,000). You financed $180,000 of the $200,000 purchase price, which gives you a loan-to-value ratio of 90%. Your LTV will decrease as you make payments, as well as when your property value increases.

Has Your Property Increased in Value?

If you’ve made considerable improvements to your home, it has probably gone up in value! You’ll need to order a new appraisal to confirm the updated value, which generally costs between $400-$600 out of pocket.

Related: Refinance Your Home Without an Appraisal

Canceling MIP on your FHA Loan

If you closed on your loan on or after June 3, 2013 and you put less than 10% down, MIP can never be removed. With a down payment of 10% or more, you’re still required to pay MIP for a minimum of 11 years. If your loan closed before that date, your MIP will be automatically cancelled when your LTV reaches 78%, but only after you’ve paid the MIP for a minimum of 5 years, and only if you have not had any late payments in the last year. In most cases, the only way to stop paying MIP on an FHA loan is to refinance your mortgage.

Canceling PMI on your Conventional Loan

Ditching the PMI on a conventional loan is easier and more flexible than on an FHA loan. Your MI will be cancelled automatically as soon as your LTV reaches 78% OR when you reach the midpoint of your mortgage (15 years into a 30 year mortgage). Again, you must be current on your payments for the cancellation to occur.

If you pay close attention to your mortgage statements and are anxious to kick your MI to the curb, you can request cancellation once your LTV reaches 80%. It is also important to note that while Fannie Mae allows homeowners to make extra payments to get to 80% LTV faster, Freddie Mac does not.

As mentioned above, if you’ve made considerable improvements to your property, you may be able to remove PMI much sooner. You’ll need to order a new appraisal to document all improvements, but as long as your LTV is below 75% or less (for Fannie Mae) or 80% (for Freddie Mac), your PMI will be removed!

Have a specific scenario you’d like to run past us? Give us a call to speak with one of our licensed loan officers. We would love to recommend the best loan program for you and your situation.

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To apply for a Mortgage or Refinance call Riverbank Finance today at 1-800-555-2098.

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Refinance Your Home Without an Appraisal

Refinance Your Home Without an Appraisal

Soon, homeowners will be able to refinance their homes without an appraisal! Beginning December 10th 2016, Fannie Mae will offer an Enhanced Property Inspection Waiver (PIW) for ONE-IN-FOUR transactions.

What is a Property Inspection Waiver?

A Property Inspection Waiver is Fannie Mae’s offer to waive the requirement for an appraisal on certain refinance transactions. It is unclear at this time whether or not purchase transactions will be offered a PIW, but more information will be released as the launch date approaches.

“When a DU loan casefile receives a PIW offer and it is exercised by the lender, Fannie Mae accepts the value estimate submitted by the lender as the market value for the subject property.” -Fannie Mae

To exercise a PIW offer, the lender must provide a Special Feature Code and the borrower must pay a $75 fee at time of loan delivery to Fannie Mae. This $75 PIW fee provides a desirable alternative to traditional appraisals, which carry an out-of-pocket cost of $400-$600 to the borrower.

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Related: Refinance your FHA mortgage without an appraisal 

What is the Benefit of a Property Inspection Waiver?

The Enhanced PIW provides many benefits to both the lender and the consumer, such as:

  • Provides a lower-cost alternative to a traditional appraisal
  • Shortens the loan origination process by removing the need to review an appraisal
  • Eliminates the expense of appraisal-related delays

Who Will Receive a Property Inspection Waiver?

Fannie Mae will use proprietary analytics and a large database of appraisal reports to determine the minimum property value for new loans. Not all transactions will receive a PIW offer—some will still require an appraisal to determine market value.

“PIW offers are issued through Desktop Underwriter® using Fannie Mae’s database of more than 20 million appraisal reports in combination with proprietary analytics from Collateral Underwriter® to determine the minimum level of property valuation required for loans delivered to us.” -Fannie Mae

What Transactions Are Eligible for a Property Inspection Waiver?

  • Single-Family Properties and Condominiums
  • Principal Residence, Second Home, and Investment Properties
  • Limited Cash-out Refinances up to 90% LTV (principal residences)
  • Cash-out Refinances up to 70% LTV (principal residences)
  • Approve/Eligible Casefiles

Have a specific scenario you’d like to run past us? Give us a call to speak with one of our licensed loan officers. We would love to recommend the best loan program for you and your situation.

Get More Information

To apply for a Renovation Mortgage or Refinance call Riverbank Finance today at 1-800-555-2098.

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15 Year HARP Refinance

Refinance your mortgage to a 15 year term with a HARP refinance.Many homeowners that have purchased their homes and have been paying their mortgage down payment after payment are unsure if they should refinance back to a 30 year mortgage. With the goal of someday retiring, starting up another 30 year mortgage may not be an option for your financial plan therefore you should look at a 15 year HARP refinance.

Refinancing your mortgage to a reduced term will save you thousands of dollars in interest not only due to a lower interest rate, but also because you will be through with your payments much faster. It is the goal of most homeowner to be debt free and pay off their mortgage. Reducing your term on a refinance can be a key step in your plan.

Benefits of a 15 year HARP loan

There are several benefits to refinancing to a 15 year mortgage through the HARP program. As previously discussed, if your reduce your loan term you will save several years of interest. Secondly, the shorter the term, the lower the interest rates will be. Lenders have less risk as you agressively pay down your principal balance which allows them to offer more attractive financing rates. Lastly, with a shorter term, you will build equity quickly. Should you sell your home after a few years you will have more money in your pocket as compared with a 30 year loan term.

HARP 2.0 now allows for mortgage lenders to transfer your mortgage insurance to a new loan at a lower rate. If you did not put down a 20% downpayment when you purchased your home then chances are you have PMI. Unfortunately you cannot get rid of PMI through the HARP program however you can still take advantage of lower rates without having that 20% equity.

Many of our clients also have 2nd mortgages which may be preventing them from refinancing their 1st mortgage to lower rates. With new HARP guidelines, we are able to subordinate your 2nd mortgages and complete the refinance. On a 30 year mortgage there is no combined loan to value (CLTV) however on a 15 year loan HARP guidelines limit the combination of your 2 mortgages to 105% of your home’s value.

If you think you may benefit from a 15 year HARP refinance and would like to get more information complete the form below or call a loan officer today at 1-800-555-2098. We will be glad to give you a free 15 year loan quote.

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Home Affordable Refinance Program Updates

Home Affordable Refinance LogoThere has been some exciting news which was recently released by Fannie Mae and Freddie Mac.  These two government agencies who help support the housing financial system, have announced that they are loosening some of the guidelines on their popular Home Affordable Refinance Program also known as HARP.  This ultimately means that it will be easier for you to refinance and while you’re doing it get a better interest rate too.

One of the original benefits of HARP is that it allows homeowner’s to refinance even if they have lost equity in their home.  Under the current HARP program which was started in April of 2009, homeowners could refinance their homes even if they owed more on their home then it was worth.  They could get financing up to 125% of their appraised value.  The prospective borrower would not be able to get out extra money or consolidate debt through this refinance but would be able to get a lower interest rate and payment.  The government was effectively helping homeowners lower their overall monthly payments for those who might not normally qualify for the lower rates.  To qualify for the HARP program your loan would have to be owned by Fannie Mae or Freddie Mac (Find out if your home is owned by Fannie Mae or Freddie Mac by clicking the links).  Theoretically, this program was meant to help the U.S economy by allowing homeowner’s to refinance and save money on the their monthly payments.

HARP Program Updates

On December 1st, 2011 further enhancements to the HARP program were announced which made it even easier to qualify for this program.  Basically, the loan to value limit of 125% (seen above) has been whipped away which means it may no longer matter what your house is worth.  If it no longer matters what the value of your home is worth you may not even need an appraisal.  The government has estimated that 80% of all homeowners who refinance through this program will not need an appraisal.  This “no appraisal” requirement is set to be activated by most Mortgage Lenders by February or March of 2012.

In addition to the appraisal feature named above the government also announced that the interest rates would also get better for homeowner’s utilizing this program.  The old version of the Home Affordable Refinance Program typically had higher interest rates for those borrower’s who had less equity in their homes.  This new announcement states that most of the interest rate increases that currently exist will be whipped away.  This effectively allows homeowner’s to qualify for the same interest rate as those with lots of equity in their home.

There are many more benefits which were announced but these two enhancements to the HARP program are the most instrumental to those homeowner’s who have been thinking about refinancing but not sure if they could qualify because their home has lost value.  If you feel you could benefit by refinancing but are still unsure please call our toll free number at 800-555-2098.  We can help answer questions you might have and check to see if you may be eligible to qualify for this great program.

Do I qualify for the HARP Program?

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