For the first time in MortgageFit, we have a member making more than 4000 posts!!

It’s my pleasure to announce that George M Akerley, one of our moderators have reached this mark.

George has been an active participant of the community since 2007. It’s been a long participation with the community and lots of members and visitors have received his help and support while dealing with mortgage issues.

Though George is a moderator of the Mortgage Know-How Forum, he actively participates in all other forums and even makes sure that no one violates the rules in our community forums.

We believe such a level of participation will inspire other members and visitors to come forward and help others take wise financial decisions or get over financial/mortgage crisis.

Here’s a feedback on George from one of our community members:

Im Glenn Jackson i recently had a very pleasant & rewarding conversation with Mr. George Ackerly George was not only very understanding & informative but gracious i was pleased with the results of our conversation consultation & when we were finished Mr. Ackerly said something in a beautiful tone of voice that made me feel wonderful he said (God Bless you) i love an try & walk within Jesus all day & when & how he finished with those words it felt like two Christians having an understanding.

Congratulations George!!! And let’s hope you’ll enjoy your stay in our forums.

5 Things to keep in mind before you refinance:

• Interest rates: You should refinance your property if it helps you in saving your money. Check out the interest rate on your current loan and compare it with the rate that you would receive after refinancing. This will give you an idea whether you would be saving money or not.

• Refinance Underwater Mortgage: If your mortgage is underwater (i.e. if the worth of the property is lower than the mortgage that you owe), try to assess how far underwater it is. With the introduction of the Home Affordable Refinance program, you may be able to refinance if your loan is not more than the 105% value of the property.

• Identifying Lenders: Once you are certain that you can refinance the loan, start contacting potential lenders. You can speak to a national lender, a local lender or a credit union (you’ve to be the member of one of the credit unions). Speaking to them will let you know about the closing costs, points and other fees that the lenders would be charging you.

• Second mortgage subordination: If you’ve two mortgages on the same property, you’ll have to check out if your second lender is ready to subordinate the new first loan. If the second lender is not ready to subordinate the loan, you may refinance the first loan with him. Or else, you’ll have to pay off the second loan and then refinance the mortgage.

• Paperwork for refinance: Before you go for a refinance, get all your paperwork ready. You should gather you current paychecks, W2, copies of federal and state tax returns, copies of bank accounts, retirement accounts and other assets.

Highlights of the new credit card reforms:

Check out the highlights of the new credit card reforms as given below.

• Time limit for monthly bills: Credit card holders will get a reasonable time limit to make their monthly payments. Credit card issuers cannot change the due date without notice. Monthly bills should be delivered to the card holders at least 21 days before the due date.

• Universal default: The concept of “Universal default” should be done away with. Some large credit card issuers have already discontinued this practice.  It is the practice of raising interest rates on customers based on their payment records with other non-related credit issuers.

• Interest rate hikes: There would be limited conditions where the credit card issuer can increase the interest rates.  In case of new transactions, interest rates can increase only after the first year. Also the credit card issuer will have to give 45 days’ advance notice of the change.

• Due dates and times: Credit card issuers cannot set arbitrary deadlines for payments. Early morning due dates should be avoided by the credit card issuers.

• Highest interest balances paid first: Cards with highest interest rates should be paid first or divided on a proportional basis. Right now card issuers apply all amounts over the minimum monthly payments to the lowest-interest balances first.

• Over-the-limit fees: If the consumers exceed their credit card limits, over-the-limit fees would be prohibited.

• Double-cycle billing prohibited: Outstanding credit card balances would be computed based on purchases made in the current cycle.  Going back to the previous billing cycle to calculate interest charges will be prohibited.

• Foreign transaction fees: Fees charged for purchasing goods outside United States would have to be disclosed in a table on credit card applications and solicitations.

• Disclosure of Credit terms: The terms and conditions of the Credit card should be clearly known to the consumers. Credit card issuers should disclose the consequences of making minimum payments each month to the consumers. Credit card issuers should make the consumers aware of terms like “how to avoid interest” or “fixed rate”.

• Credit offers: Credit Card issuers should disclose the factors that will determine the interest rates or credit limits that the consumers will receive. This will make them aware as to when they would have to pay a higher interest rate.

• People with bad credit: With the new credit card rules coming up, the credit card issuers will have to do away with fee harvesting (Credit card fees which nearly equals the credit limit the issuer has given you). Moreover, the fees that exceed 25% of the available credit limit must be spread over the first six months of card use.

Most of the borrowers who are delinquent on their mortgage payments also have a second mortgage. However, when the Government announced the $75 billion program to stabilize the housing market, it didn’t concentrate on the question of second mortgages. Thus, the Government has come up with the revised plan which makes it necessary for the lenders to modify the second mortgage when the first mortgage is reworked. The lender’s benefit is that the government will share in the cost of reducing the interest rate on second mortgages for 5 years or it will pay the borrowers to extinguish that debt.

Lenders who will modify 2nd mortgages will receive an upfront payment of $500 and additional payments of $250 a year for up to three years for successful modifications for second mortgages. Apart from this, the borrowers who will be current on the modified loan would receive payments of $250 a year for up to five years. This would be used to pay down the balance of their 1st mortgage.

It should be noted here that 12 mortgage servicers, who covered around 75% of mortgages, have signed contracts to participate in the first-mortgage program. The best part is that most of them have expressed their support for the second-lien program. However, according to the new program, mortgage servicers should also determine whether a borrower is eligible for the Hope for Homeowners program. They should encourage these refinances.

As most of the borrowers have second mortgages on their property, it will now be easier for them to modify their loans. Lots of people have posted questions regarding second mortgage modification in the MortgageFit Forums. If these guidelines are accepted by the lenders, it would be easier to resolve the mortgage problems.

PMI premiums: Private mortgage insurance or PMI comes into the play when you are unable to pay 20% equity in your home as down-payment. If you have taken out a loan in 2007 or later, you’ll now be able to deduct premiums for loans. The best part is that, this rule applies not only for private mortgage insurance but also for premiums paid for mortgage insurance provided by the Department of Veterans Affairs, the FHA and the Rural Housing Service.

Suppose you took out a loan before 1st January, 2007. You must be thinking that you won’t qualify for the tax breaks. However, if you refinance the loan now, you can take advantage of the tax breaks. But, it should be noted that this deduction is available only to taxpayers who itemize their deductions. The write-off will expire at the end of 2010.

Deducting points paid: Most of us know that we can deduct the points paid to get a mortgage. However, you can also deduct the points paid to refinance a mortgage. You can even spread the deduction over the life of the loan. Suppose you refinanced your loan to a 30 year-mortgage and paid 2 points. You’ll be able to deduct one-thirtieth of those points per year for 30 years.

Again, you should note that if you refinance for the second time with the same lender, you cannot deduct the remaining points in one year. It will be added to the points charged on the second refinancing and you will be able to deduct it over the life of the loan.

Most of the Consumer Advocates are happy with this new Act as they feel that the stricter rules are necessary to protect consumers as well as the economy. This legislation will, henceforth, see to it that the consumers have the ability to repay mortgages and prohibit reimbursement for indulging consumers into risky loans

But there are some people who have certain concerns about this Act. Some people think that this Act will limit borrowers’ access to loans and increase prices. However, it is noted that the credit risk retention requirement will help the lenders in making safe-harbor loans which is less risky for consumers.

Some of the experts are of the opinion that the bill can be very helpful provided it allows enough room for state laws to prevent abuses and limit preemption by federal standards.

Can everyone get a mortgage with a low rate?
It is not necessary that everyone would get a lower rate like 4.78%. It should be kept in mind by the buyers that it is average rate. It should not be considered as the standard rate.

Another important thing which most of us don’t know is that a rate can change several times during a day. This is due to fluctuations in the market. Thus, you’ll note that mortgage rates are 5.5% in the morning but has increased to 5.75% in the evening.

Loan rates can also vary depending upon the loan type. Thus, a 15-year fixed-rate mortgage may have a lower rate than a 30-year fixed mortgage. Mortgage rates also vary due to the size of the loan. If you are planning to take a “jumbo loans”, be ready to pay higher interest rates.

Are there other factors which may not allow me to get lower rates?
Yes, there are other factors as well which may prevent you from getting a lower rate. Your credit score is one of them. If you have a credit score of around 800, lenders will be glad to offer you attractive rates. On the other hand, a borrower with a credit score of 650 will not get good rates from the lenders. Rates will also depend upon the amount of loan you want to take compared to the cost of the property. If you take a loan less than 80 percent of the home’s value, then, you can expect to get better rates.

Apart from low interest rates, are there other costs to worry about?
Yes, there are other costs which you’ll have to pay. One of the costs which most borrowers confuse about is the Points or fees. There are some points which you can pay at the time of application while there are others which are paid at the closing. Apart from this, you will also have to pay certain fees like title insurance, attorney fees etc.

Should I consider other lenders before finally selecting the mortgage?
In my opinion, home buyers or owners who are seeking to refinance their current mortgage should do their own research. You can search online and get lots of information about current and future rate trends. You can also check out http://www.mortgagefit.com/rates/ to know the current rates available in the market.

In an announcement on March 18th, the Federal Reserve said that it would purchase as much as $750 billion of additional mortgage-backed securities from Fannie Mae and Freddie Mac. This declaration resulted in record low rates for fixed mortgages. As the mortgage interest rates are falling to a record low, it will stimulate the buying of homes.

In the last week, due to lower rates, the number of mortgage applications in the U.S. rose. Moreover, refinancing applications also increased due to the falling of the mortgage rates. Thus, the lowering of mortgage rates is giving a positive boost to the real estate market helping it to come out of the present crisis.

Special refinancing program: This is a special program which will help people to refinance their mortgage into cheaper loans. It is also known as Home Affordable Refinance. To qualify for this program, your loan must be backed by Fannie Mae or Freddie Mac. Moreover, the first mortgage on your home cannot exceed 105% of the current value of the property.

Loan-modification program: The loan modification program is designed for those who do not qualify for the special refinancing program. The modification must take place by December 31st, 2012. Lenders can reduce the interest rate of the borrowers to as low as 2%. They can even extend the loan term to 40 years. As the lenders modify the loan terms of the borrowers, the government will provide them with incentives for this.

In order to qualify for this program, the loan must be originated on or before January 1st, 2009. The home should be the primary residence of the borrower. Apart from this, the principal balance cannot exceed $729,750. Moreover, the borrowers will have to document their income. They should also sign an affidavit of financial hardship.

You can also visit http://makinghomeaffordable.gov/ and directly check whether you qualify for these programs.

Home Affordable Refinance Program in brief:
It is a program which lets you to refinance your existing mortgage into a fixed rate loan for 30 years or 15 years even though you owe more on your mortgage than your home is worth. While you refinance the mortgage, you can take advantage of the current rates prevailing in the market.

Eligibility for Home Affordable Refinance:

• You must be current on their mortgage payments. Also, your mortgage should have been originated before January 1, 2009.
• The 1st mortgage on your home should not exceed 105% of the present market value of the property.
• Your loan should be backed by Fannie Mae or Freddie Mac. Homeowners with jumbo loans do not qualify for this program.
• You can take advantage of this program only for your primary residence.
• You should have sufficient income to pay off the loan according to the new plan given by the lender.

Fees associated with Home Affordable Refinance:
Like any traditional refinance, you will have to pay lender fees, points and other closing costs.

Documentation required:

• A copy of the recent tax return.
• Two recent pay stubs. If you are self-employed, then income will be verified by checking your bank deposits, freelance paychecks, etc.
• Information about second mortgage, if any.
• Credit card account balances and monthly payments due.
• Information on car loans, student loans, etc.