Posts Tagged ‘125% loan to value’

HARP 2 is here!

December 9, 2011

Do I have your attention?… Good! The highly anticipated release and implementation of HARP 2 has arrived. For background on HARP (the Homes Affordable Refinance Program), check out my previous posts. There is a detailed “question and answer” style post here. Also, this post details the changes now allowed by Fannie Mae and Freddie Mac.

Some of my lenders have (finally!) released their guidelines and are accepting loan applications for the revamped HARP. While the guidelines individual lenders use can vary from Fannie Mae or Freddie Mac guidelines, from what I’ve seen so far, they seem to mirror one another.

Here are some specific details for using the updated HARP program:

  • allows up to 125% loan to value (LTV) for owners primary residence and second homes (was 105%). The unlimited LTV program will not start until 2012.
  • investment properties can be refinanced up to 90% LTV (was 80%). To use HARP on an investment property, the property must have originally been purchased as an investment property (not converted from a primary residence to an investment property).
  • debt to income ratio can be as high as 55% (was 45%)
  • unlimited total loan to value for homes with second mortgages. That said, the second mortgage company must subordinate their loan behind the new first mortgage to qualify
  • The “old” rules of requiring Fannie/Freddie to own your loan, you got the mortgage prior to early 2009, and being current on the payment still apply in order to qualify.

These are exciting developments that homeowners can now use and refinance into much lower interest rates. If the property is in Georgia, and you think you might qualify to use HARP, contact me and we’ll find out!

Coming Soon: “HARP 2 – The Mulligan”*

November 17, 2011

  • “one of the most anticipated sequels of 2011” – says Clay Jeffreys of The Mortgage Blog
  • “it’s about time” – says a frustrated homeowner
* Note the program is still called “HARP,” but I’m referring to it as “HARP 2” for comedic relief and clarity’s sake

Unlike some movie sequels that get filmed (really, we needed a Spy Kids 4?!?), the Homes Affordable Refinance Program, known as HARP, needed a sequel. Why? Just like Rebook realized they needed to make more “office linebacker” commercials after its popularity from a past Superbowl, HARP needed some revisions to be more readily available to homeowners so more people can enjoy it!

Reebok knew what they were doing!

The original intent of HARP was to allow borrowers who were somewhat underwater refinance their mortgage into a lower rate. On paper, it sounded great. Sadly, unforeseen issues arose that didn’t allow the program to be as effective as the government hoped it would be.

What changes should one expect with the sequel “HARP 2 – The Mulligan”? There are a few major changes, but good portions of the HARP program remain the same. You can read about the program from my recent posts here (a recent “question and answer” session) and here (an overview when the program was first announced). Changes include:

  • No maximum loan to value limit. Once this part begins (to start in 2012), homeowners can be 200 or 300% underwater and still refinance to a loan without paying mortgage insurance if there is not mortgage insurance on the current loan.
  • Up to 125% loan to value ratio to be allowed with any mortgage company. This should get underway starting in December. Presently only your current mortgage servicer was allowed to go that high, which limited consumer’s ability to shop for the best interest rate.
  • Homeowners can qualify even if they are currently unemployed AND no income verification is required if the previous loan was a stated income loan as long as…
  • Homeowners have no late mortgage payments in the last 6 months, and only one late mortgage payment of 30 days in the last 7-12 months. In other words, if you are paying on time, you could refinance without income verification.
  • Private Mortgage Insurance (PMI) to be transferred to the new loan as long as it is not Lender-Paid PMI

As long as Fannie Mae or Freddie Mac own your mortgage, you got the mortgage prior to the end of February 2009, and you are current with the payments, there is a good chance you’ll qualify for new and improved HARP 2 loan program.

Some questions you may be thinking:

  • How do I know if Fannie Mae or Freddie Mac own my mortgage? Great question! You can use their online lookup tools. Use this link for Fannie Mae. Try this link for Freddie Mac.
  • How do I get started? If the property (primary residence, vacation home or investment property) is in the state of Georgia, I can help you get started. Contact me and we will take it from there.

Remember HARP 2 is not here yet, but it is coming soon. Refinance applications for the updated program can start in December, but some parts may not be available until 2012. Stay tuned to The Mortgage Blog for updates on all aspects HARP 2 availability in the coming weeks!

Making Homes Affordable Program Expanded

June 7, 2011

This is a scary similar title to a previous post about the Making Homes Affordable refinance loan program. As previously posted, this refinance program has been extended through the end of June 2012. Now it has been expanded to incorporate existing loans and situations that it previously would not allow. These changes include:

  • Borrowers can be removed from existing loan: prior to the expansion, if two borrowers were on the existing loan, then both needed to be on the new loan. This posed a problem if changes occurred with the borrowers. For example, loss of income from one borrower, credit problems for a borrower, a divorce situation, etc. Now a borrower can be removed from the loan so long as the other borrower can prove they have been making the mortgage payment over the last 12 months from their own funds (and no late payments over the last 12 months).
  • A new borrower can be added to the existing loan: as long as the original borrower (or one of the original borrowers) is still on the new loan, and the new borrower qualifies, that person can be added to the new loan. That said, a non-occupant co-borrower is still not allowed.
  • Private Mortgage Insurance can be transferred: This is huge because, previously, loans that had PMI were dead in the water with this deal. Now PMI companies are more open to transfer their existing policies to the new loan. As it has been the entire time, regardless of the new value of the home, if PMI was not on the old loan, it will NOT be on the new one.

The basics of the loan program are the same. Existing loans looking to use this program must have been closed prior to March 1, 2009. Fannie Mae must own the mortgage. There can be no late payments in the last 12 months on the mortgage, and the home can not have been listed for sale on the market in the past six months.

In short, most of the aspects of the program have not changed, but the few parts that have open up new avenues for home owners that previously could not take advantage of this program. If you’ve been told “you don’t qualify” for this program because of PMI or the need to drop/add a borrower, reach out to me. If the property is in Georgia, I’d enjoy the opportunity to walk you through this mortgage process and help you refinance your home!

Should I refinance?

August 31, 2010

As you can probably imagine, I’ve heard this question a lot lately. It is a great question – when should one consider refinancing their mortgage?

The first step is to know your current interest rate. If the available rate is a half point lower than your current interest rate, it is worth a 5 minute call to your mortgage consultant. That is all it takes – 5 minutes and you’ll know!

In order to run a quick refinance scenario, I need the following details in order to provide an accurate evaluation of your mortgage options:

  • original loan amount
  • interest rate
  • type of loan
  • closing date

Once those answers are provided, I can run a quick scenario to let you know a new monthly payment, closing costs, and the break even point* on the new loan.

* – “break even point” is the closing costs needed to refinance divided by the monthly savings. That number shows how many months it would take to make back the money it costs to complete the refinance.

Now for the most important question of all – how long do you plan to remain in the home? Why is this question so important – well, if you know how long you plan to remain in the home AND then compare that time line to the break even point, it becomes clear pretty quickly whether or not it makes sense to refinance.

Remember, most people believe “should I refinance” is the most important question to answer. Knowing how long you plan to stay in the home is just as important.  Saving money is great, but not if it doesn’t make sense in the long run. To ensure it is the best situation for you, make sure to know “how much” you’ll save AND “how long” you’ll be saving it.

“Should I refinance”, yes that question has become about as common as “are we there yet” on road trips! If you’d like to know the answer to that question, you know how to find me.

Even though I’ve been asked that question a lot recently, I promise I have a much better disposition than Homer does handling repeated questions!