If you’re underwater and haven’t been able to refinance under the Home Affordable Refinance Program (HARP), hang in there. HARP 2.0 has been on the books for little over a month and despite eliminating the 125% loan-to-value limit, many underwater homeowners are still being turned away.
Do you meet all of the requirements under HARP 2.0 but find your existing lender still denies your application? This is because most lenders are enforcing their own loan-to-value and credit requirements for approval. Lender participation under the Home Affordable Refinance Program is voluntary so lenders are free to beef up the program requirements as they see fit.
You Don’t Have to Wait for HARP 3.0
Rumor has it that the Senate Finance Committee is meeting with HUD officials on HARP 3.0 legislation and should have a bill by June. How long it will take that legislation to be signed into law is anyone’s guess.
The good news is that you don’t have to stay with your current lender to be approved. If your existing lender turns you down for this government refinance program do a little legwork shopping from the best mortgage lenders and you could be approved.
Some lenders are only approving applications for their existing customers while others are only approving loan-to-value ratios up to 105%. This defeats the purpose of this government refinance program; however, there are lenders out there that do not enforce their own LTV requirements.
Finding banks and lenders to approve your application can be difficult as many of the top mortgage lenders are the ones approving applications for their existing customers.
Brokers & Credit Unions Are Excellent Resources
If you’re finding your application denied by the big-named lenders check out the smaller, community based-credit unions. Many have open membership and offer low origination fees without paying for unnecessary discount points.
Mortgage brokers are also an excellent resource for finding small and mid-sized lenders that are opening their doors to HARP mortgage refinancing. Remember the program guidelines for HARP 2.0 are fairly simple, anyone with a loan-to-value greater than 80% can qualify regardless of income, credit, employment status or if you’re paying for mortgage insurance.
The catch is because lender participation in the Home Affordable Refinance is voluntary for lenders, they can set their own limits for how underwater you are or your income and credit. Just because one lender denies your application doesn’t mean there isn’t one out there that won’t approve you, so don’t get discouraged.
As with any mortgage refinance application if you’re turned away find out why your application was denied. If improving your credit score will get you approved then at least you’ll have something to work on.
Fannie Mae & Freddie Mac Only
HARP 3.0 is rumored to remove the Fannie and Freddie requirement. For now if your home loan isn’t with Fannie Mae or Freddie Mac there’s nothing you can do to qualify for HARP until Congress passes legislation removing this requirement.
Getting your mortgage refinancing application approved can be a frustrating process for any homeowner, government refinance programs doubly so. Don’t get let a lender denial get you down, keep at it and you’ll find your HARP 2.0 or HARP 3.0 application can be approved.
You can learn more about getting the best deal on your next home loan without paying lender junk fees or unnecessary discount points by checking out my free Underground Mortgage Videos.