Mortgages and Refinancing: What You Must Know Today!

5 BIG Changes Coming Up in the Mortgage Industry!

2010 is bringing some big changes in the mortgage industry that will affect interest rates, taxes, and qualification. If you are thinking about buying a home or refinancing, you need to be aware of these changes! Following are some of the highlights:

by Allison Gervais-Sofnas
Sr. Mortgage Loan Consultant

Allison Gervais-Sofnas

1. The Federal Reserve is ending it $1.25 Trillion dollar purchase of mortgage loans.

For the past year, the Federal Reserve has been purchasing an enormous amount of mortgage loans which has resulted in extremely low interest rates. This program is set to expire at the end of March and many analysts expect mortgage interest rates to increase approximately .50% to 1.0%. Rates are still very low now but buyers and people refinancing should consider locking in before the market loses its biggest buyer.

2. FHA mortgage insurance is getting more expensive.

The current FHA upfront mortgage insurance premium is 1.75% of the loan amount. This will increase to 2.25% as of April 5^th. This government loan program has become very popular as it allows people to purchase homes with as little as a 3.5% down payment. Unfortunately, utilizing this program on condos has become extremely restrictive. Not all mortgage brokers are authorized to offer FHA so ask up front if you are interested in this program.

3. Tax credit is ending!

The first time home buyers tax credit of $8000 and the existing home owner (5+ years) tax credit of $6,500 are set to expire on April 30^th. Buyers must be in contract by this date and close no later than July 1^st. Other restrictions apply.

4. HARP is ending as of June 10^th.

Over the past year we have been able to lower the interest rate for clients who did not meet the current requirement of having 20% equity in the property. Under the HARP (Home Affordable Refinance Program) people have been able to refinance their existing loans up to 125% of appraised value IF the current loan is owned by Fannie Mae of Freddie Mac. If you want to know if your loan is owned by Fannie or Freddie contact your local mortgage broker to find out how to look it up.

5. Conforming loan limit is set to change again!

Unless the government changes it again, the temporary conforming limit in the SF Bay Area of $729,750 will revert back to the permanent limit of $625,500 at the end of the year.

If you are contemplating refinancing or buying property, you may want to inquire now before you are negatively affected by any of the above changes.

Allison Gervais Sofnas is a Senior Mortgage Loan Consultant with First Capital Group – a mortgage company in San Francisco, CA. She offers residential and commercial financing. Allison is also a Certified Divorce Financial Analyst and uses her expertise to assist clients with the equitable division of assets. Please e-mail Allison for more information.

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