Dean Tucker (Mortgage Banker)

The Federal Home Finance Agency announced big changes to its Home Affordable Refinance Program Monday. More commonly called HARP, the Home Affordable Refinance Program is meant to give "underwater homeowners" opportunity to refinance.

With average, 30-year fixed rate mortgages still hovering near 4.000 percent, there are more than a million homeowners in Meridian and nationwidRee who stand to benefit from the program overhaul.

To qualify for the re-released HARP program, you must meet 4 basic criteria:

1. Your existing home loan must be guaranteed by Fannie Mae or Freddie Mac
2. Your home must be a 1- to 4-unit property
3. You must have a perfect mortgage payment history going back 6 months
4. You may not have had more than one 30-day late payment on your mortgage going back 12 months

Most notable about the new HARP refinance program, though, is that the government is waiving loan-to-value requirements on a HARP loans. Homeowners' participation in the program are no longer restricted by their home's appraised value. In fact, the new HARP doesn't even require an appraisal, in most instances.

With the new HARP program, underwater mortgages can be refinanced without LTV limit or penalty.

According to the government's press release, pricing considerations for the new HARP program will be released on or before November 15, 2011; and lenders are expected to be offering the program as of December 1, 2011.

If you think you may be eligible, first confirm that either Fannie Mae or Freddie Mac is backing your loan. Both groups provide a simple, online lookup.

• Fannie Mae loan lookup : http://www.fanniemae.com/loanlookup/
• Freddie Mac loan lookup : https://ww3.freddiemac.com/corporate/

If your loan cannot be located on either of these two sites, your current mortgage is not backed by Fannie Mae or Freddie Mac, and is not HARP-eligible.

The FHFA's official press release contains an FAQ section. In it, you'll find minimum qualification standards, as well as information related to condominiums and to mortgage insurance.

The HARP program is meant to help a wide group of homeowners, but each applicant's situation is unique. For specific HARP questions, be sure to call me (208) 287-1717..

Existing Home Sales continued their upward climb in January. This is the fourth month in a row where we have seen month-over-month gains in the number of units sold. The National Association of Realtors reported that sales rose 2.7% from December. Also, the inventory levels decreased again:

The number one reason that the housing market tanked was due to over supply. So, with home sales increasing and inventory levels decreasing, this is certainly a trend with some momentum. All cash sales and distressed sales did increase last period. But any way that the excess inventory is gobbled up is good. It certainly shows that the demand is there and that investors are snapping up properties before prices rise. Maybe you should too?

As a lending professional, I have an opportunity to meet lots of Realtors®. The NAR® report says 70% of buyers work with the first Realtor® they meet. I am not sure that is the best situation. Now I know several Realtors® that if that were to happen, the consumer would be really well taken care of. One of the Realtors® I work with has been a Realtor® for sixteen years, has helped 1,000 families to buy or sell their homes, was a real estate appraiser for four years and was a lender, like me, for nine years. Now that Realtor® knows what he is talking about and would be a good first choice for a buyer or seller.

On the other hand we have over 3,200 Realtors® in the Ada County Association of Realtors® now, and a significant percentage didn't sell a single house last year. (Yes, things are really tough out there.) We usually have two Realtors® on every transaction we assist a buyer with their loan. Usually there is one who represents the seller and one who represents the buyer. Occasionally, we can have a very experienced person on one side of the transaction and someone who is a little green on the other side. In those cases the more experienced person ends up doing 95% of the work and only gets paid 50%. From that person's perspective it certainly doesn't seem very fair!

Appraisers have to do a two-year apprenticeship during which a much more experienced supervising appraiser is required to sign-off on all appraisal reports for that period. Has anyone ever considered instituting that type of arrangement in real estate for Realtors®? I am not saying we shouldn't have new people come into the business, but why not impose an apprenticeship period until a new Realtor® has learned their craft and can be trusted to be out on their own?

When selecting a Realtor® for your next home sale or purchase, consider working with someone that has been in the industry for awhile, and maybe not go with your neighbor's cousin who was just licensed. Your experience should be fun and exciting, and no the other sort that we see from time-to-time.

If consumer spending is a keystone element in the U.S. economic recovery, a full-on rebound is likely underway.

Tuesday, the Census Bureau released its national January Retail Sales figures and, for the seventh straight month, the data surpassed expectations. Last month's retail figures climbed 0.3 percent as total sales receipts reached an all-time high.

It's good news for the economy which is scratching back after a prolonged recession, however as we have discussed in previous postings, if you're looking for a mortgage - rates have been going up since November and are not going to turn around anytime soon.

Because consumer spending accounts for the majority of the U.S. economy, Retail Sales growth means more economic growth and that growth draws Wall Street's dollars toward riskier investments, including equities, at the expense of safer investments such as mortgage-backed bonds.

On the heels of the Retail Sales report's release, bond prices are falling this morning. As a consequence, mortgage rates are rising. It's the same pattern we've seen since mid-November - "good news" about the economy sparks a stock market frenzy, causing mortgage bonds to rise.

A sampling of other recent good-for-the-economy stories include:

• Corporate earnings are rising quickly (Marketwatch)
• Existing Home Sales up 12% month-over-month (CNN Money)
• The Fed says the economy looks "brighter" (Bloomberg)

The days of 4 percent, 30-year fixed rate mortgages are over. 5 percent is the new mortgage rate benchmark. That is unless the economy continues to keep showing strength; then, that number may rise to six percent.

If you're thinking of buying or refinancing a home, consider how rising rates will impact your budget. You may want to take that next step sooner than you had planned - if only to protect your monthly payments.

If your ARM is due to adjust this spring, your best move may be to allow it. Don't rush to refinance - your rate may be adjusting lower. It's because of how adjusted mortgage rates are calculated.

First, let's look at the lifecycle of a conventional, adjustable rate mortgage:

1. There's a "starter period" of several years in which the interest rate remains fixed.
2. There's an initial adjustment to rate after the starter period. This is called the "first adjustment".
3. There's a subsequent adjustment until the loan's term expires. The adjustment is usually annual.

The starter period will vary from 1 to 10 years, but once that timeframe ends, and the first adjustment occurs, conventional ARMs enter a lifecycle phase that is common among all ARMs - regular rate adjustments based on some pre-set formula until the loan is paid in full, and retired.

For conventional ARMs adjusting in 2011, an example of that formula is most commonly defined as:

(Index = 12-Month LIBOR) + (Margin = 2.250 Percent) = (New Adjusted Mortgage Rate)

LIBOR is an acronym for London Interbank Offered Rate. It's the rate at which banks borrow money from each other. It's also the variable portion of the adjustable mortgage rate equation, or the Index. The corresponding constant is typically 2.25%, or the Margin.

Since March 2010, LIBOR has been low and, as a result, adjusting mortgage rates have been low, too. In 2009, 5-year ARMs adjusted to 6 percent or higher. Today, they're adjusting near 3.000 percent. That's a big shift.

Therefore, strictly based on mathematics, letting your ARM adjust this year could be smarter than refinancing it. You may get yourself a lower rate.

Either way, give us a call (208) 287-1717. With mortgage rates still near historical lows, Eagle homeowners have interesting options. Just don't wait too long. LIBOR - and mortgage rates in general - are known to change quickly.