John Neil

Even though interest rates have come up in recent weeks, there are still many borrowers for whom it may still make sens to refinance. Thus, I write this blog post for those that are late to the party but haven't missed the boat entirely. When it comes to refinancing your home there are some things you should and shouldn't do.

Do...

-your "shopping around" on the same day. Mortgage rates can change a few times daily and so if you want a true apples to apples comparison, you should try to get all of your mortgage quotes on the same day and within a few hours if possible.

-ask lenders to give you a quote for a specific rate. This is the easiest way to see which lender has the least expensive closing costs.

-get referrals from friends and family. If your friend of family member had a good experience, it is likely that you will have a good experience as well.

Do NOT...

-refinance if your break even point is greater than 5 years. If your break-even point is greater than 5 years, even if you plan on being in the home longer than that, you would be better off to take the dollar amount of the closing costs and paying down your principal balance.

-trust a loan officer that tells you to float your interest rate. If the numbers add up and the refinance makes sense, your best option is to lock your interest rate and not worry about it. Besides, a good lender will have a free float-down option or renegotiation policy if rates drop significantly.

-refinance a mortgage to pay off student loans or car loans that may have a lower interest rate. Most mortgage terms are 15 to 30 years where student loans and cars are usually much shorter. Unless you need the extra cash flow and you are already being as frugal as possible, it is usually a better idea to leave these other loans alone.

Recently, the Rural Housing mortgage program received more government funding. The purpose of this article is to highlight several of the wonderful benefits of the Rural Housing Loan for Cache Valley and some of the surrounding areas of Logan, Utah.

1. The Rural Housing Loan allows 100% financing. The Rural Housing mortgage is one of a few mortgage programs left that allow a borrower to purchase a home in Cache Valley, Utah with no down payment. This allows the borrower to keep some of their money in their bank accounts for a rainy day fund.
2. The Rural Housing Loan does not require monthly mortgage insurance. Besides the VA loan, there isn't a loan program available that doesn't require monthly mortgage insurance without a 20% down payment. This means that the Rural Housing loan will offer one of the lowest monthly payments per dollar borrowed for home buyers in Cache Valley, Utah.
3. The Rural Housing Loan still allows credit scores down to 620. With many FHA lenders raising their minimum credit score requirement to 640, Rural Housing is one of the few loan programs left that will allow borrowers to have a credit score down to 620.
4. The Rural Housing Loan allows the seller to pay for the buyers closing costs. Sellers can pay up to 6% of the buyers closing costs. Because of this, many Cache Valley home buyers can buy a home without bringing any money to the closing table.
5. The Rural Housing Loan has higher income limits than other first time home buyer programs. The annual income limit for a family size up to 4 in Cache Valley is $74,050, and $97,750 for a family of 5 or more. Visit this website to find out if you qualify for the Rural Housing loan in Cache Valley.
6. The Rural Housing Loan is not just for first time home buyers. There is a common misconception that the Rural Housing loan is just for 1st time buyers. This is not true. It works great for 1st time buyers because of the 100% financing but it also works great for any buyer that doesn't have 20% down.
7. The Rural Housing Loan is available for most of Cache Valley, Utah. Cache Valley has so many incredible places to live. With the Rural Housing mortgage, home buyers can purchase in cities such as Smithfield, Hyde Park, Nibley, Millville, Hyrum, Wellsville, Mendon, Paradise, Benson, Amalga, Newton, Clarkston, Trenton, Richmond, and Petersboro. Visit this website to type in an address and see if it is eligible for Rural Housing financing.

I personally love this program because it makes it possible for many Cache Valley home buyers with out a significant down payment to purchase a home. I can also be contacted at 435-755-2177 if you have any questions about the Rural Housing mortgage loan program.

I am finding lately that some of my clients that may have bought a home a few years ago and are now buying a home again are stressing quite a bit about some of the "hurdles" that they have to go through to get a mortgage.

I am trying to think of ways that I can prepare these people for the new way of processing loans versus the way it was done in 2006. Let me first give you a summary of how loans were processed in 2006 versus today...

Loan Process in 2006

1. Meet with your loan officer
2. Underwriter then has you breathe on a mirror. (Foggy = approved)
3. Loan closes in 3-5 days

Loan Process Today

1. Meet with loan officer to take loan application.
2. Sign loan application and disclosures.
3. Provide income and asset documentation such as paystubs, tax returns with all schedules and W'2s, checking and savings account statements, copy of drivers license, divorce decree if applicable, etc. etc.
4. Loan officer submits loan package to underwriter who will review and either approve, conditionally approve, counter, or deny the file. (Most common is conditional approval)
5. Meet the requirements of the conditional approval (This is usually what borrowers find to be tedious).
6. Order an appraisal and make repairs if required by underwriter.

My point is that it takes a lot more to process a loan today than it did a few years ago and I think we all (Realtors, Escrow agents, Loan officers, etc) need to do a better job of preparing our clients for this. When my clients have 2006 expectations it makes my job much more difficult. Is there anything that you say or do to help your clients prepare for some of the hoops and hurdles they may encounter? I'd love to hear your feedback.

Mortgage rates continued to fall this week...

Conventional

30 year fixed 4.375% (APR 4.445%)
15 year fixed 4.000% (APR 4.127%)
5/1 ARM 3.625% (APR 3.554%)
7/1 ARM 3.875% (APR 3.644%)

FHA

30 year fixed 4.5% (APR 4.995%)
15 year fixed 4.0% (APR 4.449%)

With interest rates being lower than they ever have been in 50 years, now may be a great time to refinance. Give me a call at 435-755-2177 to see if it makes sense for you to refinance.

Interest rates have dropped to truly ridiculous levels today...

30 year fixed 4.625% (APR 4.699%)
15 year fixed 4.125% (APR 4.217%)
7/1 ARM 3.875% (APR 3.755%)
5/1 ARM 3.500% (APR 3.431%)

FHA 30 year fixed 4.5% (APR 4.988%)
FHA 15 year fixed 4.0% (APR 4.456%)
FHA 7/1 ARM 4.0% (APR 4.223%)
FHA 5/1 ARM 3.75% (APR 4.011%)

Based on these incredibly low interest rates, it may be a great time to buy or refinance. Give me a call at 435-770-2709 to see if a purchase or refinance is possible.