Surprise! HARP 2.0 Changes Again

The government is trying to make HARP 2.0 available to more underwater homeowners by changing the refinance program guidelines. Qualifying for the Home Affordable Refinance Program (HARP) is easier with the new guidelines used by Fannie Mae and Freddie Mac. Here’s what you need to know about the revised HARP 2.0 to get your mortgage refinance approved with today’s best mortgage lenders.

Government Refinance Program HARP 2.0

HARP, commonly referred to as HARP 2.0, is the government refinance program known as the Home Affordable Refinance Program. Started by President Obama in 2009, the program has a two-fold purpose, stimulate the economy by helping underwater homeowners refinance their homes with today’s low mortgage rates. The idea is by lowering mortgage payments for millions of homeowners that have not been able to refinance they’ll have more cash to spend which would boost the economy.

The fact that the government would rather you spend your cash than save is alarming for some, but hey, it’s an election year right?

If you’ve lost equity in your home and have a poor loan-to-value ratio or are completely underwater you can refinance as long as you meet the government refinance program requirements.

HARP 2.0 Eligibility Requirements

The requirements for the Home Affordable Refinance Program are fairly easy to meet, provided Fannie Mae or Freddie Mac securitized your mortgage before May 31st, 2009.

If your mortgage isn’t backed by the government and is held by a private lender like Bank of America or Wells Fargo you’re still not eligible for this government refinance program, but more on that in a moment.

  1. Your mortgage must be held by Fannie Mae or Freddie Mac
  2. The government must have backed you before 5/31/2009
  3. You must not have late payments for the last 6 months
  4. You must have paid on time for 11 of the last 12 months

HARP allows for any loan-to-value ratio meaning it doesn’t matter how drowned your equity is, if you meet the requirements above you’re in the program. Because loan-to-value doesn’t matter your lender won’t order an appraisal. It doesn’t even matter if you’re paying PMI (Private Mortgage Insurance), you can qualify. Paperwork and verification are minimal and lenders routinely close refinancing within a month.

So What’s Changing?

Under the old government refinance program rules in order to be HARP 2.0 eligible you had to have a verifiable source of income. This had to come from your employment, self-employment, or some verifiable source of non-work income like Social Security.

Under the new guidelines Fannie Mae and Freddie Mac can forego income verification as long as you’ve paid 11 of your last 12 mortgage payments on time. In the past your lender might still ask for income verification as part of a program overlay. Overlays are special rules lenders enforce above and beyond the government refinance program requirements to limit risk for investors. Under the old rules you could meet all of the HARP 2.0 program requirements and still have your application denied because of the lender’s overlay.

As long as you can document that you’ve faithfully paid 11 of your last 12 mortgage payments on time including taxes and insurance lender overlays for income verification should not prevent you from qualifying.

You may be required to provide account statements to document how you’ve been making your mortgage payments but a lack of verifiable income should no longer prevent you from refinancing under HARP 2.0.

In addition to eliminating the income verification requirement Fannie Mae and Freddie Mac have reduced the amount of paperwork for a HARP refinance, thus streamlining the process.

These looser program guidelines are expected to open the program up for 1 million households that could not qualify before based on income verification.

Not With Fannie Mae or Freddie Mac?

Unfortunately if your mortgage is not backed by Fannie Mae or Freddie Mac you are still not eligible for HARP. Rumors that HARP 3.0 will eliminate this requirement are still circulating. The government is on a buying spree for mortgages not backed by Fannie Mae and Freddie Mac which is a good sign of things to come.

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You can get free strategies for finding the lowest refinance rates from today’s best lenders for the Home Affordable Refinance Program without paying unnecessary fees by checking out my free Underground Mortgage Videos.

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5 Tips to Quickly Boost Your Credit Score Before Refinancing

If you want today’s lowest refinance rates from the best mortgage lenders you need to have a minimum credit score of 740. If you’re frustrated that the refinance rate quotes you’re getting are coming in higher than what lenders are advertising the likely culprit is your credit score.

Here are 5 tips for improving your credit score before applying for your next home loan.

How to Quickly Boost Your Credit Score

  1. Pay Down The Balances on Your Credit Cards
  2. The balances on your credit cards account for 30 percent of your credit score. Paying down your credit cards is the fastest and easiest way to boost your credit score. Try to pay down your balance down to less than 30% of your limit on each card.

  3. Check Your Credit Reports For Errors
  4. You can get a copy of all three of your credit reports by visiting the website AnnualCreditReport.com. Removing mistakes from your credit reports can boost your score by as much as 100 points once the error is fixed. Common overlooked mistakes include medical billing collections.

  5. Dispute Mistakes With Each Credit Bureau
  6. If you find mistakes in your credit reports you’ll need to dispute the error with each credit agency reporting the mistake. There are three credit bureaus that maintain your credit reports including Equifax, Experian and Transunion. If you’re disputing items on your credit report you’ll also want to contact the creditor to get the disputed item resolved and removed as quickly as possible.

  7. Avoid Applying For New Credit
  8. Old unused accounts only help improve your credit in you use them occasionally. Creditors are looking for responsible use of credit. Applying for new accounts or making major purchases like a new car could be seen as overextending yourself.

    If you have a choice between opening a new account or using an old credit card to make a purchase before paying down the balance it’s best to opt for paying with the old credit card.

    The general rule of thumb is to avoid applying for new credit before taking out or refinancing your mortgage.

  9. Avoid Closing Credit Card Accounts
  10. Closing credit accounts like those department store charge cards is more likely to lower your credit score. Having credit available isn’t a bad thing, unlike carrying large balances or maxing out your credit cards. You’ll get the most bang for your buck by paying the balances down below 30% of your credit limit.

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You can learn more about getting the best deal on your next home loan by avoiding unnecessary lender fees by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to get you started with today’s best mortgage companies without paying too much…

How to Score The Lowest Refinance Rates

Spend any amount of time shopping for the lowest refinance rates and you might be frustrated to discover the quotes you’re getting are higher than what lenders are advertising. This is because advertised mortgage rates tend to be based on having a specific credit score and financials. Here are several tips to make sure you’re getting the lowest refinance rates possible for your next home loan.

Shopping for the Lowest Refinance Rates

Getting refinanced with the best mortgage lenders is difficult these days. Government regulation and tighter underwriting standards from banks and lenders make just getting approved difficult for many homeowners. With refinance rates near the lowest levels in sixty years you would think everyone would have refinanced already but many homeowners simply can’t qualify.

If mortgage approval isn’t an issue there’s no shortcut to getting the lowest refinance rates. The underwriting process hasn’t changed since the mortgage meltdown; lenders have just raised the bar on their requirements.

If you want the lowest possible refinance rates without paying discount points you simply need to cover your bases with documenting income, equity and credit.

Your Income, Your Home Equity, Your Credit

To qualify for lowest refinance rates regardless of the type or mortgage or program you need to document sufficient income, equity and credit. It doesn’t matter if you’re refinancing a conforming mortgage, considering an FHA streamline refinance, a VA Interest Rate Reduction Refinance Loan (IRRRL) or have a jumbo mortgage; you won’t get the lowest refinance rates until your financial ducks are in a row.

Your Personal Finance Ducks:

  • Debt Income Ratio: Your monthly income versus monthly debt obligation
  • Home Equity: Your loan-to-value ratio representing your share of ownership
  • Your Credit: Your middle credit score from Equifax, Experian & TransUnion

To get approved for mortgage refinancing you must meet a particular lender’s minimum qualification for all three. When mortgage approval isn’t the issue and you want the lowest refinance rates all three of your ducks need to be in a row to score that lender’s advertised mortgage rates.

Get Your Financial Ducks In Row

Ideally before applying for mortgage refinancing you’ll have a large income, favorable home equity and really good credit. Realistically, not everyone will have all three. If your three ducks are less than stellar that’s okay…there are steps you can take to improve your finances before refinancing.

Ever hear of compensating factors? Compensating factors are other things in your personal finances that make up for some of the blemishes on your application. Think of it as a stronger duck holding up a weaker one. Suppose your income isn’t that great but you have outstanding equity and credit; it’s likely that you’ll be approved for refinance rates close to what lenders are advertising.

This isn’t to say if you have less than stellar credit there aren’t things you can do before applying to improve your score. One of the most effective strategies for quickly improving your credit score is to pay down the balances on your credit cards. It goes without saying but you should also avoid making late payments at all costs.

What About Home Equtiy? What if You’re Underwater?

If you’re underwater in your current mortgage your chances of getting refinance rates close to what lenders are advertising are slim to none. What you should be focusing on if you’re HARP 2.0 eligible is shopping for the lowest program refinance rates and fees. You still need your ducks in a row and compensating factors can improve your interest rate.

If you’re not HARP 2.0 eligible because Fannie Mae or Freddie Mac don’t back your mortgage there isn’t much you can do at the moment. HARP 3.0 is rumored to remove the Fannie/Freddie requirement bringing underwater mortgage refinancing to just about everyone.

Where You Should Be Focused When Refinancing

Getting the lowest refinance rates is important but there’s more to consider if you want the best deal for your next home loan. In fact, the fees you pay when closing on your new mortgage make or break the deal you’re getting, not just the interest rate. Pay too much closing on your new home loan and it’s going to be difficult, even impossible to recoup your out-of-pocket expenses. Considering that the average homeowner refinances every four or five years recouping your closing costs is the most important factor to consider.

Some of the most commonly overpaid mortgage fees include the loan origination fee or paying discount points. Not only are these the most commonly overpaid refinancing fees but they are the easiest to negotiate. Getting a better deal on your next home loan than your neighbors got is easier than you think.

Click Here For More Details…

You can learn more about getting the best deal on your next home loan without overpaying lender fees at closing by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to get you started refinancing with today’s best mortgage companies without overpaying at closing…

Adjustable Rate Mortgages Are Making a Comeback

Are you searching for the lowest refinance rates for your next home loan? Adjustable Rate Mortgages are becoming a good option with little risk from today’s best mortgage lenders. Here are some of the pros and cons of refinancing with an Adjustable Rate Mortgage in today’s market.

Adjustable Rate Mortgage Demystified

If you’re unfamiliar with Adjustable Rate Mortgages here’s the basics you’ll need to know. Abbreviated as ARM, adjustable Rate mortgage loans have an interest rate that changes at regular intervals. When the lender changes your interest rate, also called resetting your ARM, your payment amount will change based on the new interest rate.

How often your ARM resets depends on the type of adjustable rate mortgage you choose. These mortgage loans are designated by two numbers. The first number represents the fixed period of the adjustable rate mortgage and the second number is how often the home loan resets. Take a 7/1 Adjustable Rate Mortgage for example, the interest rate is fixed for the first 7 years and resets every 12 months (1 year) after the fixed rate period.

Who Should Refinance With An Adjustable Rate Mortgage?

You’ll find that Interest rates on an Adjustable Rate Mortgages are typically lower than 15-year fixed mortgage rates. Considering that the average homeowner refinances every 4-5 years a 5/1 or 7/1 Adjustable Rate Mortgage could be an excellent choice if you need a short-term mortgage as a bridge before selling or refinancing down the road. Taking advantage of the lower interest rates offered by and adjustable rate mortgage will get you a lower, fixed payment for five to seven years.

What Are The Risks of Adjustable Rate Mortgage Loans?

The main risk when refinancing with an ARM is that interest rates will go up when the lender resets and take your payment along for the ride. Many Adjustable Rate Mortgages are tied to the LIBOR index which is a European index susceptible to all the economic turmoil going on in the European Union. If you have a low tolerance for financial risk your best bet for mortgage refinancing might be a 30-year fixed rate mortgage.

Another problem homeowners run into with Adjustable Rate Mortgages can be the lender’s prepayment penalty. If your Adjustable Rate Mortgage has a prepayment penalty in the loan contract and you sell or refinance before the penalty ends you could be facing a hefty fee at the end of your ARM’s fixed rate period.

Should You Choose an ARM for Your Next Home Loan?

The answer to this question depends on your needs and goals for your home loan. If you need the lowest possible mortgage payment choosing a 5/1 ARM will get you the lowest refinance rates. Sticking with a 30-year term length with your Adjustable Rate Mortgage will ensure you get the lowest monthly payment.

If your goal is to build equity in your home and you’re ok with the risk a 15-year Adjustable Rate Mortgage will give you the best of both worlds; lower payments than fixed-rate mortgages while building equity at an accelerated rate over a 30-year mortgage.

Other Factors to Consider than Just the Lowest Refinance Rates

One of the most common mistakes people make is focusing on getting the lowest refinance rates at the expense of fees. The more you pay when refinancing your home at closing the less benefit you’re getting from having low refinance rates. If you’re not able to break even recouping your out-of-pocket expenses paid at closing you’re going to be losing money no matter how low your interest rate.

Some of the most commonly overpaid fees include the broker’s loan origination fee or paying for discount points. These fees are not only negotiable by vary widely from one mortgage lender to the next.

Click Here For More Details…

You can learn more about getting the best deal on your next home loan from today’s best mortgage companies by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to get you started refinancing without paying lender junk fees…

When Is The Best Time to Refinance Your Mortgage?

If you’re searching for the lowest refinance rates you might wonder when it’s the best time to refinance your mortgage. Taking the time to learn how to refinance the right way will help you avoid many of the common mortgage mistakes your neighbors are paying for. Here are several tips to help you starting with the best time to refinance your mortgage loan.

The Best Time to Refinance Your Mortgage

The rule of thumb on when the best time to refinance your mortgage is during bad economic times. During the recession mortgage refinance rates have been at their lowest levels in history and lenders are desperate to close home loans. Savvy homeowners can use this to refinance not only with the lowest refinance rates but with outstanding terms and rock-bottom prices.

The test of how good a deal you’re getting on your mortgage refi comes not from getting the lowest interest rate but how much it’s costing you to close. Commonly overpaid refinancing closing costs include the loan origination fee and paying unnecessary discount points.

When is the Worst Time to Refinance?

The worst possible time to refinance your home is during economic upturns. Home values tend to go up and many homeowners see increases in their disposable income. Banks and other financial institutions expand and open new branches. When the market is inflated refinance rates and lender fees tend to be significantly higher than you see during a recession.

Unless you’ve been living under a rock you know that we’ve been through the worst economic recession since the depression meaning now is the best time to refinance your mortgage. Refinance rates are near the lowest levels they’ve been in sixty years so there is no better time to lock in a lower payment.

What is the Best Mortgage Type?

The best type of mortgage loan depends on your situation. Mortgage type means a couple of different things including the term length (15-year vs 30-year) and the type of interest rate (fixed rate versus adjustable rate). If your budget needs the lowest payment choosing longer term lengths with adjustable interest rates will get the job done.

If you’re not familiar with Adjustable Rate Mortgage loans (ARM) you’ll see them quoted commonly as 5/1 or 7/1 ARMs. The first number represents the fixed period and the second is the frequency the lender will reset after the fixed period expires. In the case of a 5/1 ARM the mortgage is fixed for the first 5 years and resets every 1 year after.

If your goal is to pay down your home loan as quickly as possible choosing a shorter term-length and a fixed rate mortgage is a good option. Popular choices for mortgage refinancing include 15 and 10-year term lengths.

Common Mortgage Mistakes When Refinancing

One of the most common mistakes people make is focusing on getting the lowest refinance rates at the expense of fees. The more you pay at closing the less benefit you’ll get from the lowest refinance rates. It’s not just a one-time closing cost you pay for your mortgage but an out-of-pocket expense you need to break even recouping before you benefit from lower payments.

The more you pay for things like the loan origination fee or discount points to buy down your interest rate the longer it’s going to break even, if you break even at all.

Click Here For More Details…

You can learn more about getting the best deal from today’s best mortgage lenders by checking out my Free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
  • Underground Mortgage Videos
Here’s a quick sample to get you started refinancing without overpaying at closing…