The Truth About No Cost Refinance Loans Revisited

Are you considering a no cost refinance loan for your next home mortgage? You’ll see these refinance loans advertised by today’s best mortgage lenders and by most banks as an option at closing. If you’re strapped for cash the no cost refinance might seem like your only choice, but you should know what you’re giving up. Here’s the scoop about no cost refinance offers, how they really work and what you’re sacrificing in the long run to help you make an informed decision for your next home loan.

No Cost Refinance Lenders

No cost refinance can mean different things depending on your needs. First, let me tell you what a no cost refinance is not. There is no such thing as a free mortgage refinance…period. Every home loan has fees, origination and underwriting costs that have to get paid by someone. The question for the truth about no cost refinance offers is who’s paying the fees and in exchange for what?

There are two types of no cost refinance mortgage loans. There are “no cash out-of-pocket” refinance rates, meaning you’re not required to plunk down your cash at closing because all of the refinance fees are being rolled into your loan balance, and there are true “no cost” refinance rates where the fees are being paid by someone else, in this case the lender.

Why Would Mortgage Lenders Pay Your No Cost Refinance Fees?

Simply put, what’s in it for them? Mortgage lenders don’t do anything out of the goodness of their hearts (do they even have a heart?) so why on earth would they pay your no cost refinance fees?

The truth comes down to how mortgage lenders make their money, think profits. It might surprise some homeowners to learn that most lenders don’t profit by sitting back and collecting the interest from your payments, especially with today’s current refinance rates.

Lenders profit by selling home loans to investors. Home loans with higher than market refinance rates bring in the most profit. One way lenders get homeowners to agree to higher than current mortgage refinance rates is by offering no cost refinance loans.

In exchange for agreeing to higher than current refinance rates the lender pays your loan origination fee, mortgage underwriting fees and other closing costs. You get a no cost refinance with no cash out of your pocket and your mortgage balance doesn’t go up as a consequence.

Sounds like that no cost refinance is a great idea right? Remember, your payments are based on the term-length you choose and how low your refinance rates are. While you can control both, the higher your refinance rates the more cash comes out of your pocket every month for the entire time you keep the mortgage.

How Much Higher Will Your Refinance Rates Go?

The answer depends on how much you agree to pay at closing. One common mortgage mistake with no cost refinance offers is neglecting to comparison shop lender fees. If you go into refinancing thinking that the closing costs you agree to don’t matter because the lender is paying, you’re going to get screwed no matter what.

No cost refinance offers work like discount points in reverse. Remember that a discount point is a fee you pay to buy down your refinance rates. If you pay one point, one percent of your home loan amount, you’ll typically lower your refinance rates by .25%. Well, the no cost refinance offers generate a credit of one percent of your mortgage amount for every .25% you allow the lender to mark up your refinance rates.

Can you see how these no cost refinance loans work like discount points in reverse?

How much your refinance rates go up depends on how much your actual closing costs are; the better you shop around the less markup you’ll need to cover lender fees. This also means your payments will be lower than the neighbor that didn’t do their homework and blindly accepted whatever fees the lender required, figuring “heck, the lender’s paying so whatever.”

Mortgage Refinance Fees Matter

The truth is regardless of how low your refinance rates are the fees you pay refinancing your home loan make or break the deal you’re getting.

With no cost refinance offers the fees that your lender pays are responsible for how much your payment goes up. Pay less at closing and not only will you get more benefit from today’s low refinance rates but you’ll have more cash in your pocket at the end of the month.

How to Pay Less For Mortgage Refinancing

Fortunately, shopping for the best refinance mortgage rates AND fees is not difficult if you go about it the right way. The government recently overhauled the Good Faith Estimate making it a much more effective comparison shopping tool. (It used to be completely useless)

The secret to getting the lowest rates and closing costs is how you use the new Good Faith Estimate for your refinance mortgage rates comparison shopping. First, watch out for quotes that include discount points.

Discount points make lenders a boatload of cash from unsuspecting homeowners. It made sense to pay points in the 1980s when people were getting double-digit mortgage refinance rates. Today it’s just a waste of your cash.

Make sure when you’re requesting quotes that the mortgage refinance rates DO NOT include discount points. If you’re curious about how paying this mortgage fee affects your payments there is a table on page three of the Good Faith Estimate, but always start with zero point quotes.

Watch Out For No Cost Refinance Fees

Sounds like a contradiction right? Not cost refinance loans don’t have fees right? Wrong! Remember your payment amount is going up by the amount the lender is paying for you. You want the smallest increase in the best refinance rates possible.

Focus on the mortgage lender fees found on page two of your Good Faith Estimate starting with the loan origination fee. This is paid to the person or company arranging your mortgage refinance. Many brokers will tell you that one percent is standard; however, I’ve reviewed community and military credit unions that offer no cost refinance loans with loan origination fees as low as $400.

If you take one thing away from reading this today it should be that the closing costs from your no cost refinance make or break the deal you’re getting. The less you agree to in mortgage fees the more benefit you’ll get from today’s best refinance rates.

Page Two Of Your Good Faith Estimate Is A Goldmine

As I mentioned the new Good Faith Estimate is the best thing Uncle Sam has done for refinance rate shoppers well, ever. If you’re interested in a no cost refinance you’ll find the credit being generated to cover your mortgage fees in box 2a. You want this credit to be as low as possible while still covering your closing costs so your monthly payment doesn’t go up any more than necessary.

Section B on page two of the Good Faith Estimate includes lender fees you can shop around for and third party fees. Comparing these fees from a variety of banks, lenders, and credit unions will give you a good baseline for what is reasonable. Don’t be afraid to haggle over fees found on page two of your Good Faith Estimate. Mortgage brokers, banks and credit unions are a dime a dozen so if you’re getting pushback from a loan officer simply scratch them off your list.

Click Here For More Details…

You can learn more about getting the best no fee refinance with the lowest payment possible for your next home loan 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 help you avoid paying lender junk fees by shopping smartly…

How To Compare Current Mortgage Rates & Get The Best Deal

If you’re looking for current mortgage rates on the web, it can be pretty confusing out there. How much benefit you’ll get from refinancing with today’s mortgage rates depends on how you go about shopping for your next home loan. Here are several tips to help you avoid common mistakes that steal the benefit you get from refinancing with the lowest current mortgage rates.

Current Mortgage Rates Can Be Deceiving

The rates you see published on the web and advertised on television can be deceptive because they’re not telling the whole story about the fees involved unless you can speed read the fine print. Lenders advertise teaser rates to suck homeowners into overpriced home loans.

“Wait…” you might be thinking, if current mortgage rates are so low how can the mortgage be overpriced? Mortgage lenders are in the business to make money and they don’t do it by just sitting back and collecting the interest on your home loan payments. If you want the best deal on your next home loan and the most benefit from current mortgage rates it helps to understand how lenders profit.

Mortgage Lender Fees Make or Break Your Deal

If you’re shopping for current mortgage rates to refinance you should also be focusing on the fees found on your Good Faith Estimate. The most common way that lenders manipulate current mortgage rates that results in overpaying is with discount points.

Did you pay a point or two when you first purchased your home? Depending on what was going on in the market at the time when you bought your home this could have been a waste of money. Should you pay discount points with today’s current mortgage rates? For most homeowners the answer is absolutely not.

You see, discount points are just a fee left over from the 1980s when homeowners were paying double-digit mortgage refinance rates. Back then it made sense to pay this fee to buy down your interest rate because the savings allowed you to recoup your out-of-pocket expenses in a fairly short amount of time.

The problem with current mortgage rates being at historically low levels is there’s nothing quick about the way you recoup the expense, if at all. Also, the benefit you’re getting by lowering your interest rate is proportionally lower, meaning you’re getting much less bang for your buck.

The problem is that paying discount points offers next to no benefit for anyone but mortgage lenders. This fee is pure profit for lenders which is why they quote current mortgage rates that include discount points first.

If you’re curious about how paying discount points affects your payment there is a chart on page 3 of the new Good Faith Estimate; however, as a starting point you should always request zero discount points when comparison shopping current mortgage rates.

How to Shop Smartly Using The Good Faith Estimate

Before you do anything else you can save yourself a lot of financial frustration by staying on top of your credit reports. If you haven’t already been to AnnualCreditReport.com for free credit reports you should go there before doing anything else. AnnualCreditReport.com is a government mandated website where the three credit bureaus (Equifax, Experian & Trans Union) are required to give you free access to your credit reports.

If you want to see your credit score there is a fee; however, CreditKarma.com seems to be an excellent alternative to those “free credit score” websites that charge you for credit monitoring services. (CreditKarma has clever TV commercials too)

Once you’re confident that your credit reports are accurate you can give your credit score a quick boost by paying down the balances on your cards below 30% of your limit. CreditKarma.com also offers free advice and community support on improving your credit profile.

Understanding The New Good Faith Estimate

The government recently overhauled the Good Faith Estimate (GFE) and the new version is vastly superior to the old GFE when it comes to shopping for current mortgage rates. Most of the fees you’ll want to pay attention to can be found on page two of your Good Faith Estimate starting with the loan origination fee.

Many mortgage brokers will tell you that one percent is the standard amount to pay the person or company arranging your home loan; however, I have reviewed community and military credit unions that charge as $400 flat for the mortgage origination fee. Remember, the less you pay obtaining your next home loan the more benefit you’ll get from current mortgage rates.

The next item on your Good Faith Estimate (item two in box A) is mortgage yield spread premium. Every now and then when I write about yield spread premium I get a snarky comment from someone saying that yield spread premium is illegal now and that I should do my homework. Fact of the matter is that yield spread premium is NOT illegal. The only thing that changed is that mortgage brokers cannot charge you a loan origination fee AND take yield spread premium from the lender. (The days of double-dipping mortgage broker commissions are gone for good.)

Yield spread premium is alive and well. Are your eyes glazing over as you think yield spread what?! It’s just a fancy name for a pretty simple concept. Mortgage lenders pay a premium for borrowers that accept interest rates higher than the current mortgage rates. This premium is a credit known as yield spread premium. You can use the premium to pay your loan origination fee and other closing costs. Just how much do you get for taking higher than current mortgage rates?

Yield spread premium works like discount points in reverse. For every .25 percent increase you agree to above current mortgage rates you get a credit of one percent of your loan amount towards your closing costs. This is the “credit or charge for the interest rate of x%. This REDUCES your settlement charges” that you see in box 2a of the new Good Faith Estimate. Again, yield spread premium is alive and well, just read your Good Faith Estimate.

Should You Agree to No Fee Refinancing?

Yield Spread Premium is how lenders like Bank of America offer no fee or no cash out of pocket mortgage refinancing. What are you giving up by agreeing to higher than current mortgage rates? Your payments will be higher for the entire time that you keep the home loan meaning you’ll eventually be overpaying significantly for having your closing costs paid by the lender. If you’re short on cash and having the lender pay your closing costs is your only option go for it; however, for most people it’s better to pay the loan origination fee and other settlement charges yourself.

How Long Before Breaking Even?

Some financial advisors like the Mortgage Professor claim it’s a mistake to look at how long it’s going to take you to break even when weighing your refinancing options; however, I disagree with their arguments. While it’s true that dividing your total mortgage fees by the amount you’ll be saving each month only approximates your break-even point because it doesn’t factor in things like term length and taxes, it’s still good enough an approximation for most people to make an educated decision.

You can figure this out for yourself by using a simple mortgage calculator to determine your new payment amount and then divide your out-of-pocket expenses by the amount your mortgage payment is going down.

Simple Mortgage Calculator

Loan Amount: Years: Mortgage Rate:

Annual Taxes: Annual Insurance:

Monthly Payment =

This tells you the number of months it’s going to take to break even recouping your closing costs and if you’re comfortable with this amount of time them refinancing with current mortgage rates on the offer you’re considering probably makes sense.

Click Here For More Details…

You can learn more about getting the most benefit from today’s current mortgage rates 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 help you avoid paying lender junk fees by shopping smartly…

Why VA Refinance Rates Are The Best Deal Going

Are you a vet that hasn’t taken advantage of VA refinance rates? If so, you’re missing out on the best deal going in mortgage loans. If you’ve already got one you could qualify for an Interest Rate Reduction Refinance Loan (IRRRL) to take advantage of low VA refinance rates. Here are the basics you need to know about VA refinance rates to take advantage of the financial benefits you earned by serving.

VA Refinance Rates Are Still At Record Lows

VA home loans are made by private lenders and guaranteed by the Department of Veteran’s Affairs. Like any home loan they come in several different types and your eligibility is based on how long you served or on your current duty status. Your VA loan eligibility can only be used for a home that you personally occupy. The program requires a decent credit score to qualify and offers VA mortgage rates for purchase as well as cash-out refinance.

The Interest Rate Reduction Refinance Loan Is a Gem

Once you’ve got a VA home loan one its best features is your ability to take advantage of VA refinance rates with the program’s Interest Rate Reduction Refinance Loan (IRRL). This is essentially a VA Streamline Refinance which allows you access to lower VA refinance rates without a credit check or home appraisal.

VA home loans are very similar to FHA home loans with the added benefit of not requiring you to carry mortgage insurance. FHA mortgage insurance can add hundreds of dollars to your monthly payment making these loans more suitable for homeowners with credit challenges.

IRRRL Basics You Need to Know

The most attractive feature of the VA streamline refinance is that you don’t need credit underwriting or a home appraisal. You can use an IRRRL to take advantage of VA refinance rates with a no-cost or no cash out of pocket home loan, meaning your new lender will roll all the costs into the balance of the new mortgage or pay your loan origination fee and other closing cost with yield spread premium.

Keep in mind if you choose the latter you’re giving up the lowest VA refinance rates in exchange for the lender paying your fees, which also means you’ll have a higher mortgage payment.

If you’re refinancing an existing Adjustable Rate Mortgage with fixed VA refinance rates keep in mind that your interest rate and payment amount could increase. Also, cash out refinancing is not allowed with the Interest Rate Reduction Refinance Loan and you must already have a VA mortgage on the property.

Many lenders offer IRRRL refinancing with term lengths of 15 or 30 years. Because lender participation in the VA guarantee program is voluntary for lenders you’ll find differences in what banks and lenders offer. It is possible that a lender might deny your application for IRRRL because lenders are not required to participate. Also, differences in closing costs like the loan origination fee make comparison shopping important for any VA home loan.

Comparison Shopping for VA Refinance Rates

Just because you’re getting VA refinance rates doesn’t automatically mean you’re getting a good deal.

In fact, the fees you pay closing on any home loan make or break the deal you’re getting. You’ll have to pay the VA a funding fee which is a percentage of your home loan based on your VA eligibility.

The fees you pay closing on your VA mortgage, regardless of the type are set by the lender and are not regulated by the VA. This includes any discount points, the loan origination fee and any junk fees the lender tries to slip past you.

The less you pay closing on your new home loan the more benefit you’ll get form VA refinance rates. Simple comparison shopping using the Good Faith Estimate will ensure you’re not overpaying at closing if you go about it correctly.

How to Shop for the Best VA Refinance Rates

Before you start shopping for a lender for your VA refinance it’s important to make sure your credit score is as high as possible. You can do this by making sure that your credit reports are accurate at AnnualCreditReport.com and by paying down the balances on your credit cards below 30% of your limit. Once you’re satisfied with your credit score you’re ready to start shopping for a lender.

Do you know which mortgage fees are required and how much is reasonable to pay at closing? Should you pay discount points and what about that loan origination fee?

Discount points are a relic of the 1980s when homeowners were paying for double-digit mortgage rates. Essentially you’re paying this fee to buy down your mortgage rates. For every discount point you agree to pay at closing you typically lower your interest rate by .25 percent. VA refinance rates are still near historical lows making discount points an unnecessary expense that chances are you’ll never recoup.

Despite this lenders advertise VA refinance rates that include discount points to make their offers seem more attractive, often burying the fees in impossibly small print.

When requesting VA refinance quotes make sure you’re getting zero discount point quotes

If you’re interested in seeing how paying discount points affects your monthly payment there is a table on page three of the Good Faith Estimate.

Loan Origination Fees & Yield Spread Premium

The most important fees you’ll want to focus on when shopping for VA refinance rates are found on page two of your Good Faith Estimate. Page two is all about understanding estimate settlement charges. Keep in mind that the fees found on your VA refinance quotes are only “estimates” and could change on your HUD-1 Settlement Statement.

Page two, box A, item one is the loan origination charge. This is the fee paid to the person or company arranging your VA home loan and most brokers will tell you that one percent is reasonable. This might be a reasonable amount; however, you can do a lot better. I’ve reviewed small community and military credit unions that charge as little as $400 for loan origination. Remember, the less you pay for the mortgage origination fee, the more benefit you get from VA refinance rates.

Item 2 of box A is any yield spread premium based on specific, quoted VA refinance rates. For the uninitiated, yield spread premium is a credit paid by the lender for accepting higher than market interest rates. This credit is used to pay the loan origination fee and other closing costs. Yield Spread Premium works like discount points in reverse. The lender pays you the credit because you’re accepting a higher interest rate meaning your payments will also be higher.

Should you accept yield spread premium to pay your closing costs? If you’re strapped for cash and can’t pay the fees yourself this might seem like your only option. Remember that you might also be able to roll these fees into your mortgage balance without agreeing to higher VA refinance rates.

The next section on page two of your Good Faith Estimate is box B, which details specific lender fees that you can and cannot negotiate. Comparing these fees from a variety of banks, credit unions and other lenders will give you a good idea of what’s reasonable allowing you to negotiate to pay less.

How to Protect Your Credit Score When Shopping for Refinance Rates

One last thing to keep in mind when requesting quotes for VA refinance rates. Make sure you’re giving the loan officer your Social Security number. This will ensure that you’re getting an accurate quote. Many homeowners refuse to give their Social Security number when shopping for VA refinance rates because they think they’re protecting their credit score. If you do this you’re relying on that loan officer’s best guess as to what interest rate you’ll qualify, which is almost always a waste of everyone’s time.

The trick to protecting your credit score from excessive inquires when shopping for VA refinance rates is to limit all of your quotes to a two-week period. (14 days) If you do this you’ll only get dinged for one mortgage lender inquiry on your credit report and will protect your credit score.

Click Here For More Details…

You can learn more about getting the lowest VA refinance rates without paying 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 help you avoid paying too much closing on your VA mortgage loan…

6 Tips For Getting The Best Mortgage Rates

Everyone wants the best mortgage rates for their next home loan; however, the approach most people take results in overpaying thousands of dollars at closing. In fact, the fees you pay closing on your next mortgage make or break the deal you’re getting. Here are six tips for getting the best mortgage refinance rates while paying as little as possible closing on your next home mortgage loan.

How to Comparison Shop for the Best Mortgage Rates

The process of refinancing your home isn’t much different from when you took out your first mortgage. Before you can make an informed decision on which lender’s offer is best there are a few decisions you need to make. Is your goal to improve your monthly cash flow by reducing your payment? Would you rather build equity in your home and payoff that mortgage faster? Deciding what your goals are for refinancing before you start shopping for the best mortgage rates will make the process infinitely easier.

6 Steps to Lower Mortgage Refinance Rates

Have you decided whether you want to lower your payments or to pay off that mortgage loan faster? If so you’re almost ready to begin shopping for a lender and their best refinance rates.

  1. Pick a Mortgage Program & Stick With It
  2. The most important decision you can make when refinancing your home loan is which mortgage program you want/need. Do you need a fixed mortgage rate with low payments? Choosing a 30-year fixed rate loan will meet your needs. Want to pay off the loan quickly with a reasonable payment amount? Consider an Adjustable Rate Mortgage with a 15 year term. Is your credit iffy and you need an FHA streamline refinance?

    Once you’ve decided which program works best for you stick to it and don’t let a fast-talking loan officer quote mortgage refinance rates from programs that you’re not interested.

  3. Check Your Credit Reports First
  4. If you’ve already started shopping for mortgage refinance rates and you’re finding the quotes you get are higher than what you’re seeing advertised, the likely culprit is your credit score. Before you do anything else visit the government-mandated website AnnualCreditReport.com and carefully check your credit reports for mistakes. If you find errors you’ll need to dispute with each credit bureau and allow enough time for the correction to be reflected in your credit score.

    If your credit score isn’t what it should be the quickest way to boost it is by paying down the balances on your credit cards below 30% of your limit. Finally, never miss a payment…especially on your mortgage.

  5. Shop From Multiple Lenders Online
  6. Getting the best mortgage rates for your next home loan means shopping around from a variety of lenders. Also, make sure you’re requesting mortgage refinance quotes the right way. If you want accurate quotes you have to give the loan officer your Social Security number. Many homeowners refuse to provide their SSN when shopping for the best refinance rates because they think they’re protecting their credit score.

    If you shop this way you’re relying on that loan officer’s best guess as to what your interest rate will be which is almost always a waste of time. The trick to protecting your credit score while shopping for mortgage refinance rates is to limit your quotes to a two week (14-day period). If you do this you’ll only get dinged for one lender inquiry on your credit report.

    Also, make sure the quotes you receive are zero discount point quotes. If you’d like to see whether paying discount points is worthwhile there is a table on page three of your Good Faith Estimate; however, you should always start with a zero point quote when shopping for mortgage refinance rates.

  7. Compare Mortgage Refinance Rates & Fees
  8. One of the most common mistakes is focusing on getting the best mortgage rates at the expense of fees. The new Good Faith Estimate makes it very easy to comparison shop fees. Focus on page two, paying close attention to the loan origination fee and Yield Spread Premium. If you’re not already familiar Yield Spread Premium, this is a credit generated by accepting higher than market interest rates. You can find this credit, if any, listed on page 2, section A, item 2.

    The test of how good of a deal you’re getting when refinancing your home comes from how long it takes to break even recouping your out-of-pocket expenses. The quicker you break even the more benefit you’re getting from low mortgage refinance rates. Conversely, the more you pay at closing the longer it’s going to take you to break even reducing your benefit from refinancing.

    You can approximate your break-even point by adding up all your out-of-pocket expenses and dividing by the amount that your payment is going down each month. If you’re unsure what your new payment will be based on the mortgage refinance rates you’re being quoted you can use a simple mortgage calculator like this one to determine the new payment amount.

    Simple Mortgage Calculator

    Loan Amount: Years: Rate:

    Annual Taxes: Annual Insurance:

    Monthly Payment =

  9. Decide How Will You Pay For Your Next Home Loan
  10. Every home loan has fees and what you’ll need to decide is how you’re going to pay your closing costs. If you want the best mortgage rates available you’ll have to pay out-of-pocket to close.

    If you accept higher mortgage refinance rates to cover your loan origination fee and other closing costs you’re going to have a higher payment and eventually overpay for those fees. Unless you’re strapped for cash it’s almost always better to pay the mortgage origination fee and closing costs yourself.

  11. Use The Good Faith Estimate & HUD-1 Statement

  12. The Good Faith Estimate is an excellent tool for shopping for the best mortgage rates. Keep in mind however that it is only an estimate. The final word on your mortgage refinance rates and fees is found on your HUD-1 Settlement Statement. If it’s not in writing on your HUD-1 you didn’t get what the loan officer promised.

    It’s a good idea to reconcile your Good Faith Estimate with the HUD-1 Settlement Statement before closing. The same is true of your mortgage refinance rate lock. If you haven’t locked in your best mortgage rates in writing you haven’t locked.

Investing a few hours in careful comparison shopping of mortgage refinance rates and fees will save you thousands of dollars at closing and help you avoid common mistakes that tripped up your neighbors.

Click Here For More Details…

You can learn more about getting the best mortgage rates without paying lender markup or junk 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 help you get the best mortgage refinance rates without overpaying at closing…

HARP Program News: Version 2.5 Anyone?

It’s been years since the HARP program was first introduced and millions of underwater homeowners with privately held mortgages are still waiting for HARP 3. If you’re paying on an underwater mortgage held by a private lender like Bank of America or Wells Fargo instead of Fannie Mae or Freddie Mac, the news out of Washington these days has been less than encouraging. Here’s the latest HARP program news you need to know regarding your underwater mortgage loan.

HARP Program Update

HARP 3 is long overdue and has been rumored to remove the Fannie Mae, Freddie Mac requirement opening the door to refinancing privately-held mortgage loans for millions of financially responsible Americans. That’s what President Obama promised in his State of the Union Address right…help for financially responsible underwater American homeowner?

The HARP program has only been open to Fannie Mae or Freddie Mac mortgages leaving millions of Americans with privately-held home loans out in the cold. These are the same privately-held (including subprime) home loans largely responsible for the mortgage crisis.

New HARP bills come and die in Congress every year; however, the Fannie Mae and Freddie Mac requirement remains largely because investors have a stake in these mortgage loans and stand to lose a ton of cash by helping homeowners who are struggling to make their payments.

Obama Refinance Program Changes

President Obama hasn’t stopped fighting for a HARP program that’s open to everyone that needs help. HARP 3 isn’t gaining much traction in Washington but there is hope. One of the potential changes the President is looking to make is to push forward the HARP eligibility date.

While HARP 3 is part of the White House agenda, overcoming investor concerns raised by removing the Fannie Mae, Freddie Mac requirement remains a difficult issue. Removing this requirement is said to require more than the President’s executive order and would have to make its way through Congress before reaching the President’s desk to become law.

Unfortunately mortgage help for underwater homeowners is not a hot topic in Congress right now with the focus squarely on domestic terrorism rather than the housing crisis which “ended” several years ago.

Still, if HARP 3 doesn’t get approval there are other changes in the works to expand the HARP program worth noting. These changes have been dubbed HARP 2.5 by many professionals in the business.

HARP Program Eligibility Date

Under HARP 2 the cutoff date to be eligible for the Home Affordable Refinance Program is May 31st of 2009. This means that Fannie Mae or Freddie Mac must have purchased your mortgage loan before that date to be eligible. June 1st of 2009 or later is simply a day late and a dollar short until HARP 3 arrives.

If you don’t qualify for the HARP program and are underwater your only other option is a cash-in refinance. This means you’re bringing sufficient cash to the closing table to pay down your mortgage balance to a favorable loan-to-value ratio. The problem here is if you had that much cash lying around you probably wouldn’t be underwater in your home loan in the first place, so your HARP program eligibility wouldn’t be an issue.

This is little consolation for most privately-held underwater homeowners who have to wait for HARP 3 to arrive.

There is a shimmer of good news in that the proposed HARP program extension would push that cut-off date out to 2010. This only helps people with Fannie Mae or Freddie Mac backed mortgages that missed the May 31st, 2009 cutoff. (Still a significant number of responsible homeowners left out of the HARP party…)

This proposal is nothing new; it was part of bills sponsored by Robert Menendez and Barbara boxer in the Senate…also known as the place where good bills go to die. The most recent bit of legislation proposed by the duo is called the “Responsible Homeowner Refinancing Act of 2013.”

Whether or not the 2013 version of the bill will make it to President Obama’s desk is anyone’s guess at this point. The Responsible Homeowners Act of 2012 never did and died a quiet death in Congress.

What About Re-HARPing?

Another possibility is the option for people who took advantage of the HARP program the first years it came out to re-HARP. Mortgage refinance rates are quite a bit lower than they were several years ago making re-HARPing a beneficial feature for many homeowners.

The problem with proposed changes to the HARP program is that as more time passes there is less urgency for Congress or the President to take action. Part of the mentality is that if these underwater homeowners were going to default on their mortgages they would have done so already so why change a program that’s “clearly” working?

The upside of the housing recovery is that many areas of the country homes are beginning to appreciate, meaning fewer homeowners are underwater and in need of HARP 3.

If your home appreciates and you’re no longer underwater the chances are good that you’ll qualify for traditional mortgage refinancing and won’t need a government refinance program like HARP 3. (Assuming your credit is sufficient to quality for today’s refinance rates)

In the meantime stay tuned to RefiAdvisor for more HARP program updates.

Click Here For More Details…

You can learn more about paying less for your next home loan from today’s best mortgage lenders 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 help you get the best refinance rates without paying unnecessary lender fees…