FHA Home Loans Refinancing

FHA Mortgage Applications Tripled in the Past Year

08.21.08

Government-insured mortgage applications tripled in the past year according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Of all mortgage applications accepted during the month of July 2008, 29.1 percent were for government-insured loans (consisting of mostly FHA loans) compared to 8.4 percent in July 2007.  FHA home loan volumes continue to rise as conventional lending continues to tighten.

 

Data from the U.S. Department of Housing and Urban Development (HUD) show that the level of conventional to FHA refinance applications has increased 317 percent on a year over year basis in July, the bulk of which is likely from subprime ARM products. Similarly, the level of conventional to FHA refinance endorsements has increased 260.8 percent on a year over year basis. Based on the MBA survey, application volume for government-insured loans was up 133.9 percent in July from a year ago.

 

In March of this year, the Economic Stimulus Act of 2008 temporarily raised the FHA and conforming loan limits for most areas in the country, which broadened FHA financing options for more borrowers. The Housing and Economic Recovery Act of 2008, passed in July 2008, permanently raised the lending limit, not quite as high as the Economic Stimulus Act, but high enough to still broaden the reach of FHA mortgage loans.

 

FHASecure, under the Economic Stimulus Act of 2008, provides holders of subprime adjustable rate mortgages (ARMs) the opportunity to refinance their loans to more affordable fixed-rate loans. This program is due to expire on December 31, 2008. The other foreclosure bailout program will begin before the expiration of FHASecure. HOPE for Homeowners will be initiated on October 1, 2008. Like FHASecure, it allows holders of subprime ARMs to refinance into more affordable fixed-rate mortgage loans.

 

The news isn’t so great for conventional mortgage applications, the MBA reports that those fell to the lowest level in 6 years. Application volume for conventional loans was down 50.2 percent. Refinancing activity led the downward charge last week, according to MBA data, dropping 3.7 percent to 34.8 percent of total applications down from 35.2 percent the previous week. Purchase applications fell 0.4 percent, despite mortgage rates that appear to have eased somewhat during the week. The MBA’s preliminary rate survey found that the average contract interest rate for 30-year fixed rate FHA mortgages decreased to 6.47 percent from 6.57 percent; formal rate surveys are due out Thursday.

 

“With two more weeks left until the unofficial end of summer and mortgage rates threatening six-year highs, little on the horizon suggests any reversal of the current seasonal trend through the end of 2008,” said Mortgage Maxx publisher Paul Descloux.

 

The recent influx of activity for FHA home loans underscores the need for modernization of FHA’s lending guidelines. The new FHA Modernization Act of 2008 proposes to make the much-needed modernizations, which will be tested as more and more applications for government-backed loans keep coming in. The massive shift from conventional to government loans is due mainly to the fact that conventional lenders have tightened down lending standards to the point where only those with high credit scores and very low debt-to-income ratios can qualify. FHA’s standards are more reasonable, and allow those who have some credit challenges the opportunity to be a homeowner and to refinance troubled loans.

 

Even if a borrower doesn’t have a troubled loan, they are afforded the opportunity to refinance their existing loans into competitively priced FHA home loans. If you’re interested in getting a FHA loan or refinancing into one, fill out the free loan quote on this page, or call us.

 

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[...] Government-Insured Mortgage Applications for July Tripled in the …Government-insured mortgage applications tripled in the past year according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Of all mortgage applications accepted during the month of July 2008, … [...]

Interesting fact about mortgage loans and loan modification! We are helping homeowners modify their mortgage when they don’t qualify for a refinance loan. – Lisa Lowe





 

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