You likely have family, friends, co-workers or other acquaintances who bought homes when the housing market was flourishing and who are now faced with foreclosure due to some form of financial adversities.
That said, individuals who have lost their homes as a result of failing to meet their mortgage payments are not the only ones facing a struggle. Many homebuyers who are financially stable and have good credit are being very mindful of their budget and are treading with caution. This is because they are stuck with homes that have significantly depreciated in value and are currently worth less than their present mortgage. Understandably, these borrowers feel as though they are drowning and throwing their money away.
To aid struggling homeowners, the government developed the Home Affordable Refinance Program (HARP) a few years back. Initially, many homeowners thought that this program would help to provide relief, but HARP turned out to be rather complex, which made qualifying difficult. In fact, to the frustration of some of today’s homeowners, even after the HARP 2.0 revisions, they’re loan officers (LO) continue to tell them they are not eligible for qualification.
If you are a homeowner who is unable to qualify, you should know that your qualifying problems may be due to your lenders lack of HARP qualification knowledge. Unfortunately, not all lenders fully understand the program guidelines. In certain cases, some lenders may create underwriting overlays that can result in your disqualification even though according to HARP guidelines you actually qualify. Likewise, some banks hire “mortgage tellers,” who are not fully educated on all the guidelines, to fill out applications.
Therefore, before you settle for a “no” and explore other options, you need to ask your loan officer the following five essential questions:
1. Is an appraisal required? – Seek a second opinion if your loan officer tells you an appraisal is needed. The reason is it may be possible for you to qualify for an appraisal waiver. In order to make this determination for you, your LO should know how to properly enter your information via Freddie Mac’s or Fannie Mae’s automated underwriting systems.
2. Does my mortgage meet the necessary re-fi qualifications? – In order to qualify your mortgage…
- Must be up-to-date on payments for the last 12 months
- Must not have been refinanced under HARP in the past. The only exception is a HARP loan that was refinanced by Fannie Mae between March and May of 2009.
- Must be owned or guaranteed by Freddie Mac or Fannie Mae
- Must have been sold to Fannie Mae or Freddie Mac prior to or no later than May 31, 2009
- Is required to have a current loan-to-value ratio that is greater than 80%
The above is information your loan officer should readily know.
3. Do you accept mortgage insurance transfers? – You will want to find a lender who accepts mortgage insurance transfers if you have private mortgage insurance (PMI) or lender paid mortgage insurance (LPMI). Don’t settle for a LO that doesn’t.
4. Is it possible for me to refinance a condo or rental property with HARP? – Yes, it is possible for you to refinance both with HARP. If your current lender is not willing to refinance either a condo or a rental property, or is unable to do so, find one that will. You can take your HARP loan to any participating financial institution in the country.
5. What is the highest LTV on which you can lend? – As long as your new mortgage is a fixed rate loan with a 30 year term or less, there are no LTV (loan-to-value) limitations under the HARP mortgage program. HARP only restricts LTV on adjustable rate mortgages and on loans with terms that exceed 30 years.
Since this is the case, if your LTV is higher than 105% and your lender is restricted to an LTV of 105%, you need to find another lending officer who has access to LTVs over 105%.
When all is said and done, it is in your best interest to shop around for HARP refinancing. Remember, you don’t need to take “no” for an answer. Find lending officers who understand the Home Affordable Refinance Program guidelines.
Craig Reynolds is a seasoned entrepreneur and mortgage industry veteran with over 15 years experience in managing and loan consulting. Craig is noted as establishing successful Mortgage Consulting teams that create and foster long-term relationships with clients. Contact www.alliedmortgagedirect.com.