One of the loan types available as part of VA home loan program is the refinancing option. These refinancing loans allow veterans access to loans that can help pay off existing debts, lower monthly mortgage payments, use equity for home improvements, and other uses.

Understanding VA Refinance Loan Programs

With low interest rates, VA home loans are a great option for qualifying veterans to improve their financial standing. Depending on what you would like accomplish with your home refinancing, there are several different options available as part of the VA home loan program:

VA Streamline Refinance Loan

One of the most popular and basic VA refinancing options, the streamline loan helps veterans refinance their homes under lower rates and with better terms than their existing mortgage may be. Known officially as the Interest Rate Reduction Refinancing Loan, the streamline loan is ideal for those veterans who don’t need cash from their refinancing and instead are looking for a simple way to lower payments and costs.

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Mortgage rates have fallen to their lowest point in five decades, but local Realtors and economists don’t expect that to trigger an avalanche of homebuying or refinancing.

One reason they don’t expect the housing market or the broader economy to benefit much from the low rates is that lenders are still hypercautious.

“The big hurdle is qualifying for a mortgage, regardless of the rate,” said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp. “It’s a huge hurdle.”

Furthermore, it’s likely that new borrowers already took advantage of the low rates this year.

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The average rate on a “jumbo” mortgage — a loan of more than $729,750 — has fallen nearly a point and a half in a year, according to an article by Jessica Silver Greenberg in The Wall Street Journal. So it’s no surprise that the average 5.48 percent rate is prompting a wave of refinancings. According to the Mortgage Bankers Association, applications to refinance are now at a 13-month high.

So should you refinance?

The old rule that rates need to drop by two points seems to be have been thrown out the window, but I’d say you still want to make sure rates have dropped by at least a point since you got your original loan. (Refinancings aren’t free, after all). Also make sure that:

• Your credit score is solid. My colleague Linda Stern wrote today that 1 in 4 Americans now have a credit score under 600. Jumbo refis are going to be easiest to get if your score is at least 700. If you’re thinking of refinancing, ask your mortgage broker or banker what your score is; they will generally do a check at low or even no cost.
• You can stomach the appraisal process. Your property may have declined in value from 10 to 50 percent in the past two years and an appraisal may reflect that, affecting your ability to refinance. What’s more, out-of-town appraisers may not be able to discern fine points of value. Before you jump into a refi, read my column“Five Tips to Save You from Appraisal Hell.”
• You plan to stay put for a while. You need to be able to amortize the refinancing costs over the life of your loan. My husband and I have an adjustable rate mortgage on our co-op and it might be worth it, for our peace of mind, to transition into a fixed-rate mortgage. But we’d have to stay in this apartment at least three more years to amortize the refinancing overhead — and we’re not sure that’s the game plan. Before you refi, check and see when you’ll “break even” to cover your refinancing costs. Then, make sure you’re confident about staying in your current home until then.

Found here.

The latest data shows that the average rate for a 30 year fixed rate mortgage declined 2 basis points since the last week to 4.81 percent.

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages, 1 year ARMs as well as application volume for both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage declined 2 basis points since the last week to 4.81% while the purchase application volume declined 5.7% and the refinance application volume declined 12.2% over the same period.

It’s important to note that with the final expiration of the governments massive housing tax credit subsidy, home purchase activity is dropping precipitously even with plunging interest rates.

The purchase application volume is now at the lowest level seen in well over a decade.

The following chart shows how the principle and interest cost and estimated annual income required to cover the PITI (using the 29% “rule of thumb”) on a $400,000 loan has changed since November 2006.

Found here.

Recover Closing Costs Within 5 Years and Other Tips

Have you heard? Mortgage rates hit their lowest point of the year last week.

Wow, every time I think they can’t go any lower and just have to start climbing soon, rates go down. Again. That probably has many of you wondering whether it’s worth it to refinance your mortgage when it’s probably already at an enviable rate by historical standards.

To help you answer this question, I came up with the Refinancing Rule of 5s.

Here it is:

Refinancing Rule of 5s:

1.Your new interest rate should be at least .5 percentage points lower than your current rate.

The old rule of thumb was that you should refinance if you could get a rate that was 1 to 2 points lower than your current one. Well, the rules have changed, because rates in recent years have been at historical lows, so a half point drop makes up a larger percentage of your existing rate.

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The darkest cloud over the economic recovery — the troubled commercial real estate market — may be clearing a bit.

Prices of commercial property are up slightly compared with last fall. Loan modifications have risen sharply the past six months. Commercial mortgage-backed securities (CMBS), a big funding source that was comatose for two years, has come to life recently.

The developments won’t alleviate the sector’s biggest problem: the rising pace of defaults. But they should contain the damage and provide a lifeline to better-performing properties, analysts say.

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Do you qualify for help under President Obama’s latest foreclosure prevention effort, announced Friday?

Here’s a quick take on who may be eligible under the new home-loan programs, which include aid to borrowers who become unemployed and incentives for lenders to reduce loan balances for underwater borrowers. The information comes from Obama administration statements and a Friday analysis of those plans by economists at Goldman Sachs in New York.

Three months of mortgage relief for the unemployed

For three months, jobless mortgage holders get temporary forbearance on their mortgage loan. They’ll still have to pay 31 percent of their monthly income, but not the full amount they usually have to pay each month on the loan. Loan servicers participating in the Making Home Affordable Program – which includes many big lenders – are required to offer assistance to all jobless borrowers who meet eligibility criteria.

To be eligible, you must show that you are drawing unemployment insurance benefits, that you live in the home, and that the loan was originated before Jan. 1, 2009. The loan balance must be below $729,750. You can’t be more than 90 days delinquent in your payments.

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Commercial real estate owners are walking away from properties that have become untenable as investments, just as homeowners have walked away from houses they can no longer afford to pay off or sell.

The latest commercial property owner to do this is Vornado Realty Trust (VNO), the $13 billion real estate investment trust, which warned last week that it would walk away from two loans totaling $235 million.

The trend is likely to escalate in coming months as more loans mature and refinancing remains difficult and costly. As with residential properties, there is less incentive for owners to hold on to properties when the buildings are worth less than what is owed on their mortgages.

“Frankly, I am surprised that we have not seen a lot more,” said Rob Little, chief investment officer of Cornerstone Real Estate Advisers LLC, with $32 billion under his management.

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Local real estate investor Mark Ayer got himself a $400,000 deal in December 2009: a 22,000-square-foot vacant furniture store that a California investor paid $3.8 million for in 2006.

It’s a scenario telling of today’s struggling commercial real estate world. The California buyer paid a premium for the Springdale building using the attractive financing tools at the time, and then Arhaus Furniture unexpectedly moved out. Wrapped in debt and desperate to avoid foreclosure, his only choice was a fire sale.

Nearly four years have passed since the rate of residential foreclosures started its climb. In comparison, the local commercial real estate industry is in year two of rising defaults.

Our region ranks 20th out of the 100 largest metro areas for its commercial mortgage delinquency rate of 5.8 percent and 23rd in delinquency for construction loans at 20.5 percent, according to Foresight Analytics’ fourth-quarter 2009 report. Both figures skyrocketed last year as loans fell out of balance, property values dropped, vacancy increased and it became difficult to refinance.

High-profile local properties like Northgate Mall, Kenwood Towne Place, Hyatt Regency Cincinnati, Bridgewater Falls and the Williamsburg of Cincinnati Apartments have fallen victim. Tri-County Mall is among a list of at least 63 distressed local properties that had been financed with securitized loans in the mid-2000s. There could be dozens more on banks’ balance sheets.

With these statistics, those in the industry don’t expect things to turn around soon.

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