Posts Tagged ‘125% LTV’

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!

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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!

HARP revamped

October 24, 2011

The government announced changes to the HARP program this morning (October 24, 2011). I know there will be lots of questions about the program and the changes, so let’s try a “Q and A” approach to this post!

* I’ve offset the updated portions of HARP with bold colored text. *

Q: What is HARP?

A: HARP is the Home Affordable Refinance Program, but like characters from the Lord of the Rings, it has many different names including Making Homes Affordable, DU Refi Plus, Freddie Relief, and some even refer to it as the Obama Refi Plan.

Like HARP, Gandalf has many names including Gandalf the Grey, Gandalf the White, The White Rider, Greyhame, Mithrandir, Stormcrow, The Grey Pilgrim, Tharkun, Olorin, Láthspell… you get the idea.

Q: Does anyone qualify for HARP?

A: No. There are two main items that each current homeowner must meet to qualify. First, either Fannie Mae or Freddie Mac must own your mortgage. Second, Fannie or Freddie must have received your loan prior to June 1, 2009.

Q: How do I know if Fannie Mae or Freddie Mac own my loan?

A: Great question! It is nice that Fannie Mae and Freddie Mac have both created a look-up tool to make it easier to find out if they own your mortgage. To use Fannie Mae’s, use this link. For Freddie Mac, go here.

Q: Are there any other criteria to meet in order to qualify:

A: Yes, there are other items that potential borrowers must meet. These include being current on your mortgage payments, no late payments in the last 12 months, a qualifying credit score, and borrowers still must qualify based on their income.

Q: NEW – Are there loan to value limits?

A: No, there are now no loan to value limits to qualify. You can be 200% underwater on your mortgage and still qualify to use HARP. This was previously a major holdup to homeowners qualifying to use this program, and it has now been eliminated.

Q: If I have less than 20% equity in my home, will I have to pay PMI on the new loan?

A: No, you will not have to pay PMI on the new loan regardless of the loan to value/amount of equity in your home.

Q: I pay PMI now, can I qualify for the HARP program.

A: Your PMI payments on the new loan will not go up, but the transfer of your PMI from your current loan to the new loan will require some extra steps. Let your loan officer know if you have PMI on your current loan.

Q: I have a second mortgage on my home. Can I still qualify? Would I have to consolidate into one mortgage?

A: Yes, you can still qualify for HARP, but not by consolidating the mortgages. HARP does not allow homeowners to consolidate loans. The second mortgage company must agree to subordinate behind the new first mortgage. The revamped HARP may allow auto-subordinations to occur, which will make it easier for homeowners to use HARP if they have a second mortgage.

Q: Can I refinance any property?

A: Yes, you can. Primary residence, second homes, and investment properties can all qualify for HARP.

Q: NEW – Can I use HARP with any lender?

A: Yes, you can use any lender to refinance your mortgage. Prior to the loan to value changes from 125% to no limit, homeowners were required to use their current loan servicer to go up to 125%. That is no longer the case.

Q: When will these changes go into effect?

A: Lenders should begin coming out with updated guidelines in the next few weeks. Homeowners can more than likely begin using the revamped HARP in December 2011. The HARP is currently extended to go through the end of 2013, so there is plenty of time to take advantage of it!

Q: I have more questions, and would like to get started. What do I do?

A: If the property is in the state of Georgia, I can help get you started with the refinance process. Contact me and we’ll get underway with the process and answering any additional questions you have about HARP. If the property is not in the state of Georgia, contact a local loan officer/lender to get started.

Like the Lord of the Rings, the HARP has a lot of names and details that go with it. Unlike the Lord of the Rings, it won’t be an grand, epic, and sometimes exhausting 1,000+ page read cover to cover… but both come with a happy ending!

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!

Questions to ask when refinancing

May 23, 2011

In a recent post, we looked at the extension of the Making Homes Affordable loan program into June 2012. I mentioned the first step in the process is asking questions to see if a refinance is potentially a wise financial decision. The first thing I do when someone asks me whether or not a refinance makes sense is ask them these four questions:

  • What was the original loan amount?
  • What is the interest rate?
  • What is the type of loan?
  • When was the closing date?

With this information I can put together some rough refinance figures based on their current monthly payment, estimated closing costs, and estimated remaining principal balance.

These numbers won’t be exact, but the beauty of using these questions is my client will know in less than 5 minutes if it might be worth investing more time in trying to refinance their mortgage. If it looks like the numbers make sense, then we can proceed to completing a loan application, pulling credit, etc.

The fifth and final question is the most important one of all. Before I take a loan application, ask about income, equity in the property, or pull credit to start someone’s loan file, I always ask “how long do you plan to remain in the home?”

Again, this is the most important question to ask. Why? If the break even point (number of months it takes to make up the closing costs for the new loan) on refinancing the current mortgage is 3 years away, but you plan to sell within a year, why would you need to refinance your mortgage? It doesn’t make any sense to do it!

That is how I approach every potential client who is looking to refinance. I find out the current payment, potential new payment, how long it takes to break even, and how long one plans to stay in the home. No gimmicky sales pitches, just the facts and nothing else.

Thinking about whether or not a refinance might be right for you? If you want the facts, and only the facts, you know who to contact!

Making Homes Affordable Program Extended

May 17, 2011

The Making Homes Affordable Loan Program has been extended for another year. The new expiration date for this program is June 30, 2012. Meaning, in order to qualify for this loan, the refinance must be completed by that date.

You could be thinking… “Great! What exactly is the Making Homes Affordable loan program?” Fantastic question! I’m glad you asked.

Making Homes Affordable (also know as DU Refi Plus for Fannie Mae loans OR Freddie Relief for Freddie Mac) is a loan program designed to help homeowners, whose property values may have declined, take advantage of the current historically low interest rates. Qualified homeowners can refinance their mortgage up to 125% of its current appraisal value.

The best part? If you are not paying mortgage insurance on your current loan, there will NOT be mortgage insurance on your new loan!

In order to qualify for the loan, homeowners must:

  • have closed on the current loan prior to June 1, 2009
  • verify the mortgage is held by Fannie Mae or Freddie Mac
  • be current on the mortgage payment
  • not be paying private mortgage insurance on the current mortgage*
  • subordinate or pay off any other liens (home equity line or fixed second mortgage) on the property**

* – if the loan currently requires mortgage insurance, there is a possibility of transferring it to the new loan

** – in order to subordinate other liens, the guidelines of the lien holder must be met. If unable to subordinate a second mortgage on the property, the homeowner would need to payoff the second mortgage in order to qualify for the Making Homes Affordable program

Remember that this loan program pertains to the first mortgage only. While closing costs can be rolled into the new loan amount, no other debts can be put into the new mortgage. This means the program does not allow cash out refinances or consolidating multiple mortgages.

Making Home Affordable loan program is a great tool for homeowners to use to refinance their current mortgage. Several of my clients have used it over the past couple of years and saved money by lowering their mortgage payment!

If you’d like to save money on your mortgage payment and get started with the loan process:

  • The first thing to do is decide if it makes sense to refinance your mortgage. I have five quick and easy questions to ask you that would determine if a refinance is the right financial decision to make.
  • Next, let’s figure out if Fannie Mae or Freddie Mac hold your loan. That is something we can research together OR you can easily look it up yourself at Fannie and Freddie’s websites. For Fannie Mae, use this link. For Freddie Mac, try this one.
  • Then, we need to start the loan process by getting you prequalified for a mortgage. This part of the process will be very similar to the process you went through when you initially purchased the home.
  • Finally we put it all together. If the monthly savings indicate it might make sense to refinance AND Fannie Mae or Freddie Mac own your mortgage AND you qualify for a new loan, then it would be time to order an appraisal and get the ball rolling!

How do you get started with part 1 of this process? That is easy, contact me! If the home is in the state of Georgia, I would be able to help you with the refinance. You don’t have to use your current loan servicer, and can refinance with whomever you choose. What are you waiting for?!?

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!

125% LTV Refinance Program Available

March 10, 2010

The Making Home Affordable Program created a program allowing borrowers to refinance even when the value of their home has decreased in value.  The allowable loan-to-value ratio for the program is 125% LTV, but up until now, most lenders were only offering the product up to 105% loan-to-value. 

Good news!! (drum roll) . . . . We can offer this program up to the full allowable loan-to-value of 125%. 

So how do you find out if YOU might qualify?

Question # 1 — Do you pay Private Mortgage Insurance (PMI)?

If you pay PMI on your current mortgage, while the program “allows” for your mortgage insurance company to adjust your insurance to accommodate for the new program (and the 125% LTV), in reality, mortgage insurers (or PMI companies) are not cooperating with the program.  So, if you pay PMI, unfortunately, I can’t help you.

If you do NOT pay Private Mortgage Insurance (PMI) . . .

Question # 2 — Do you have a 2nd mortgage?

If you have a 2nd mortgage, you can qualify for the program, but you can NOT pay off the 2nd mortgage as part of the new refinance.  The only option would be to have the 2nd mortgage subordinate to the new mortgage.  And, if you are already in a negative equity situation (and needing the 125% LTV guide of the program), there is a good chance that the 2nd mortgage company will not approve your subordination request.  For more information on 2nd mortgage subordinations and why 2nd mortgages can be a refinance road-block, read my post here.

If you do NOT pay PMI and you do NOT have a 2nd mortgage . . .

Question # 3 — If your loan currently owned by Fannie Mae or Freddie Mac?

To check to see if your loan is owned by Fannie Mae, you can use their loan lookup tool online.  NOTE:  when you hit “get results” the top of the screen will appear as if the form has not been submitted; you need to scroll down to see the results of the search.

To check to see if your loan is owned by Freddie Mac, you can use their loan lookup tool online.

If you do NOT pay PMI, and you do NOT have a 2nd mortgage, and if your loan IS owned by either Fannie Mae or Freddie Mac . . .

You are eligible and I can help.

Call me and let’s talk through the details, options, your qualifications, etc.  Hope to hear from you soon!  Soon, as in, before mortgage rates go up April 1st (my professional “guess” is that interest rates will be at 5.625% on April 1st, 2010 . . . I know that will be April fool’s Day, but 5.625% and rising interest rates is nothing to joke about).