Refinancing

Loan limits on the rise for FHA, but not for Fannie and Freddie

FHA loans could become the go-to financing option for homebuyers in New York and New Jersey, but with higher fees.  By Kenneth R. Harney

After a year characterized by grumpy partisan gridlock, Congress came up with a Thanksgiving compromise that could change the mortgage choices of buyers and refinancers in more than 660 markets across the country: It raised maximum loan limits for the Federal Housing Administration while leaving loan ceilings untouched for Fannie Mae and Freddie Mac.

In effect, this may make FHA the go-to financing option for borrowers needing loans up to $729,750 — with down payments as low as 3.5 percent — in New York, New Jersey, high-cost areas of California, metropolitan Washington, D.C., and scattered counties in other states, including Massachusetts, Florida and North Carolina. Fannie Mae- and Freddie Mac-eligible loans in those areas, meanwhile, stay capped at $625,500.

Equally important, the new plan raises the FHA ceilings for purchasers in hundreds of more moderately priced markets. In Hartford, Conn., the limit for FHA is now $440,000 — up from $320,850; Fannie and Freddie remain capped at $417,000. Seattle-area buyers’ maximum FHA loan amount jumped to $567,500, while the Fannie Mae-Freddie Mac ceiling remains at $506,000.

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Freddie Mac Raises Bar for Refinancing With Home-Equity Debt

By Jody Shenn – Nov 15, 2011 5:22 PM ET

Nov. 15 (Bloomberg) — Freddie Mac, the government- supported mortgage company, made it harder for some borrowers with second-lien home equity debt to refinance as it released guidelines for its version of the federal Home Affordable Refinance Program.

For a borrower with loan-to-value ratio of less than 80 percent, the McLean, Virginia-based firm will require total housing debt, including second loans, of less than 105 percent of a property’s current values, according to a notice to lenders posted on its website. Previously, there was no cap.

“The rationale is to manage risk better,” Brad German, a spokesman, said in a telephone interview.

President Barack Obama has said he directed Freddie Mac and rival Fannie Mae to expand their HARP programs to help ease the U.S. housing slump and aid consumers. The companies, which were seized by the U.S. in 2008, are detailing the changes today, after they were announced Oct. 24.

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Curbing Closing Costs

The New York Times
By LYNNLEY BROWNING
Published: January 27, 2011

BORROWERS have some weapons for keeping closing costs down, the result of recent guidelines requiring lenders to disclose certain fees, but perhaps the most underutilized consumer tool simply involves old-fashioned haggling.

Good-faith estimate rules, part of a tougher Truth in Lending Act that emerged from the mortgage crisis, mean that lenders must provide a clear picture of the costs involved in buying or refinancing a home. Yet consumers may not realize that some of those numbers are actually negotiable, mortgage experts say.

“There’s a lot of room for negotiation in the costs of closing,” said Barry Zigas, the director of housing policy at the Consumer Federation of America, a consumer advocacy group, “and consumers should examine every charge and not hesitate to challenge them and try to bring them down.”

Closing costs can run a borrower 3 to 6 percent of the price of a property, according to the Federal Reserve. In 2010, the average cost for a $200,000 purchase rose by nearly 37 percent, to $3,741, according to Bankrate.com, a financial data publisher; the average in New York State was $5,623.

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