Recent data shows that over 10 million Americans are underwater on their mortgage. Being underwater on a mortgage means that the current market value of the property exceeds the amount owed on the loan. The federal government found that the first HARP program did not help enough homeowners so it has changed eligibility requirements.
Big Change from Harp 1 to Harp 2.0
Harp 2.0 removed the LTV or loan-to-value ratio cap. Under HARP 1, if you owed $130,000 on your mortgage but your property value appraised at $100,000 then you could not refinance. Harp 1 did not allow the ratio between the loan and the property’s value to exceed 125%. The LTV requirement is gone is HARP 2 for fixed-rate mortgages backed by Freddie and Fannie.
Other changes include:
- Elimination of some “risk-based” fees for homeowners
- Waiving some representations and warranties that lenders use to make loans owned or guaranteed by Freddie and Fannie.
- No need for a new property appraisal with a reliable automated valuation.
- Date extension for the HARP program until 12/31/13 for loans originally sold to Freddie and Fannie on or before 5/31/09.
Eligibility Requirements
- Freddie/Fannie guaranteed mortgages only
- Up-to-date on payments
- No minimum credit score, qualifying income, or property appraisal
- Must be underwater or nearly underwater.
- Some double-dips are allowed if homeowner took advantage of HARP 1 during March – May 2009.
We offer more information on this program through our free newsletter. Sign up today.
Categories:
Refinance Tags:
With the state of the economy nowadays, more and more people are searching for ways to make ends meat. Mortgage refinance is a good option because it may allow you take on a smaller mortgage payment or reduce your interest rates. The problem with applying to refinance your mortgage is that, after submitting your application you may experience refinance rejection and find that you do not qualify.
To help your odds of acceptance for your refinancing, I have compiled a list of the top five reasons that may disqualify you. This should help ensure that you have the best opportunity of mortgage refinance from the start.
Your Credit Score Is Subpar:
The first thing that your lender will check is your credit score. Your personal credit report, from all three major credit agencies, will be easily accessible to the lender, so you must be ready for it. Having past financial troubles is an indication that you are not truly trustworthy in the lender’s eyes, so if you have had previous defaults on loans or a bankruptcy, that could be grounds for immediate refinance rejection.
Lack Of Sufficient Funds In The Bank:
When applying for a mortgage refinance, it is imperative that you remember that you will have to pay anywhere from 5-25 percent out of your own pocket in fees and such. Your lender may look in your bank account and your past spending history. This is about financial trust again. They have to be able to see that you are responsible, so they can justify lending you the money. If they have a reason to believe that you will not be paying the remaining balance, they may decide to reject your application.
Already Struggling With Debt:
Having too much debt is always hard, and lenders understand that. If they see that you have two or three credit cards maxed out and other bills that you have been meaning to pay off, but haven’t quite gotten to yet, they may use that as an excuse for refinance rejection.
If you are able to maintain a healthy financial record, have proven that you are able to make sound economic decisions, and if you are always paying your bill on time, you should be fine when applying for your mortgage refinance. If you are unsure of what your credit score is looking like, it may be best to check that out before submitting your application. It may save you a lot of heartache and time.
Categories:
Fast Mortgage Tags:
Two Keys for a Fast Mortgage
You may have heard the horror stories about how a friend or family member applied for a mortgage they needed fast only to wait weeks or longer to find out they were not even approved. This does not have to happen to you because there is a fast track to mortgage approvals if you just know a few tips.
1. First you need to work with a mortgage professional who understands how to do a fast mortgage approval. Do not just ask how long their underwriting times are – ask how fast they can close a mortgage from application to closing table.
2. You also need to have all of your necessary documentation available so the loan officer can approve your mortgage faster. If you have to dig for your tax returns, W-2 forms, pay stubs, bank statements, and other required documentation you personally can turn a fast mortgage process into a very slow one. If you know there are challenges on your credit you will need to work closely with the loan officer to make sure all issues are resolved before expecting a fast mortgage. Delays like these are not uncommon and it is those applicants who are the most prepared and who follow the advice of the mortgage professionals who end up with fast mortgage closing.
Categories:
Fast Mortgage Tags:
To begin looking for a home, soon-to-be borrowers should look for what they can afford. It is generally recommended that mortgage payment should not exceed 28% of your gross income. This figure includes your mortgage payment and homeowner’s insurance. First time homeowners may often be surprised by how many mortgage options are available. To learn about all of them without dealing with many different individuals, using a mortgage broker is recommended.
Some of the options that new borrowers learn about are the traditional and non-traditional mortgage programs. The traditional 30-year fixed mortgage locks your interest rate and locks your payment. The advantage of this option is stability however many non-traditional mortgage options cater to people that do not plan to be in their home for the long term or that do not have the down payment for a traditional mortgage.
Borrowers need to remember that each mortgage option has pros and cons. A responsible mortgage broker will tell you the pros and cons up front.
Categories:
Fast Mortgage Tags:
- Find a realtor that won’t mind submitting multiple low offers in this slow market. Some people have started to fish for a home. To do this, soon-to-be home buyers take all the homes in their price range and submit offers (with lots of contingencies) on all of them at 35-50% of their asking price. Fishers wait patiently until a seller bites and then they hook them.
- 100% financing and interest-only mortgages were popular but you need a down payment to purchase in 2012. Expect 10-20% down payment unless you qualify for a first-time buyer program.
- Find a mortgage professional that will explain all of the pros and cons of your mortgage options. No matter the mortgage program you choose, there are good and bad aspects that must be weighed. The system is simple. Financial institutions know that your home will often be your biggest asset. Lending institutions will work with you to find the best program for you because they want you to make the interest payments. Lenders want you to be successful so that you will pay more interest on the next home. So you must choose, either get pre-approved for a mortgage or sit out.
Categories:
Home Purchase Tags:
Ask Yourself Prior to Purchase
Buying your first house is a huge decision and there are multiple factors to consider. This article will outline 5 questions each future homeowner should ask.
How long do you plan on living in the home?
Americans usually live in homes for about seven to nine years. Each future homeowner needs to decide if they plan to move in just a few years or stick it out for the long haul. Usually, the shorter amount of time that you live in a home, the less time your home has to appreciate in value. Also, in a market where home prices continue to decline in certain markets, future homeowners need to assess the risk of a short-term buy. The length of time future homeowners plan to live in their first home will impact the mortgage option of best fit. Homeowners that stay in their homes for more than 10 years, a long-term fixed-rate mortgage might be the best choice. If you know that will be imminent within 5 years then an adjustable rate mortgage or ARM might be the best choice. There are many options to choose within these basic categories. Talk with your mortgage professional about the other options available and the loan products they have access to.
Will the home you are about to buy meet your future needs?
Many life changes can affect the first time home buyer. Some will plan to have kids within the next couple of years. Do you plan to start a business and run it out of your home? These types of questions need to be asked prior to taking the plunge. Be sure that the home you purchase will meet your needs for years to come. In other words, you don’t want to outgrow the house too fast.
How do your finances look to lending institutions?
If you have more issues on your credit report, many lenders will still provide you with a home loan, but because you are more of a lending risk, you will have to pay higher interest rates and fees.
Where do first time homeowners find the down payment and closing costs?
Most homebuyers need to pay for the down payment and closing costs to complete real estate financing. Usually, you do not need a large down payment if credit scores are high. Multiple mortgage options offer a zero down and low down payment home loans If you have less than perfect credit, coming up with 10-20% of the property cost for a down payment will open multiple mortgage options. In a slower market, many homebuyers will negotiate that the seller pays for all closing costs.
Do you know what the ongoing costs of home ownership are?
There are multiple ongoing costs of homeownership that need to be considered. Some of these costs include maintenance, improvements, insurance, taxes, HOA fees, and more. If you are concerned about these costs, you may need to look for home loan options that minimize fees and lower mortgage payments. Make your realtor and mortgage lender aware of any concerns you have.
Categories:
Home Purchase Tags:
