I Want To Refinance But My Home Didn’t Appraise For What I Paid. What Should I Do?

Have you been sidelined from today’s low refinance rates because your home appraisal is too low? Being underwater in your mortgage is not a good feeling, especially when you could be paying hundreds less after refinancing. Here are several options for underwater homeowners to help you get right-side up in that underwater mortgage loan.

Your Home Appraisal & Ability To Refinance

What is a mortgage refinance home appraisal? When prospective lenders order an appraisal for your refinancing application they are looking for the a monetary value to your home, considered its fair market value if you were to sell.

The appraisal helps lenders determine if you overpaid for your home based on the value of comparable homes in your area. If you overpaid for your home when you purchased or because the local market took a nose-dive, the risk for lenders refinancing your home skyrockets.

Mortgage lenders are all about managing their risk when lending and your home’s appraisal is one factor used in determining your eligibility for refinance rates.

There are several kinds of home appraisals ranging from electronic to a walk through performed by a licensed home appraiser. Fully electronic appraisals rely on a sales comparison approach. The computer looks at the sales of homes in your area with similar characteristics.

These characteristics include physical aspects like the number of bedrooms, bathrooms, how old your home is and the square footage. The quality of your neighborhood matters as similar homes with different schools may be more desirable than yours. If the lender is relying on an electronic appraisal it’s easy to see how you’re not getting credit for things like finishing your basement or your home’s curbside appeal.

What Happens When My Home Appraises For Less Than I Paid?

When you apply for mortgage refinancing the lender uses your home’s appraised value to determine your loan-to-value ratio. (LTV) This ratio along with your credit score is used when quoting refinance rates.

If you have an unfavorable loan to value ratio, higher than 80%, you might find the refinance rates you’re being quoted are higher than what lenders are advertising. If you’re underwater, meaning your LTV is greater than 100% you’ll find lenders will simply deny your application.

Refinancing Options For Underwater Homeowners

If you have an unfavorable Loan-to-Value ratio there are options including government refinance programs. If your home loan is backed by Fannie Mae or Freddie Mac and they got ahold of it prior to June 1st, 2009 you could be approved for refinancing under the Home Affordable Refinance Program.

If your mortgage is privately held by someone like Wells Fargo your options are limited to cash-in refinancing. This means you’re bringing sufficient cash to the closing table to buy your Loan-to-Value down to 80%. For many underwater homeowners this is simply not feasible due to the amount of cash it would take.

If you fall into this category of underwater homeowner your options are limited until HARP 3.0 arrives. Rumors of changes to the Home Affordable Refinance Program eliminate the Fannie Mae and Freddie Mac requirement essentially allowing anyone with an underwater mortgage to streamline refinance.

HARP 3.0 proposals come and go in Congress but nothing has made its way to the President’s desk. The Home Affordable Refinance Program is set to expire at the end of this year. If Congress fails to act I fully expect the President to extend HARP by executive order. Unfortunately until HARP 3.0 materializes the government is leaving millions of underwater homeowners in the cold.

How To Pay Less For Mortgage Refinancing

The most common mortgage mistake made by underwater homeowners is shopping for an approval. If you’re desperate to refinance and jump at the first approval you get without paying attention to fees you’re sure to overpay.

The Good Faith Estimate makes it easy to compare refinance rates and fees by focusing on page two. Make sure the quotes you’re getting are all for the same mortgage program and ask your loan officer for zero discount point quotes. If you’d like to see how paying discount points affects your payments there is a comparison table on page three.

Requesting zero point quotes from the same mortgage program is the only way to make an apples to apples comparison of refinance rates and fees from different lenders.

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HARP 3.0 Is Dead, Long Live The Home Affordable Refinance Program

Yup, I said it, HARP 3.0 is dead. It was never more than a rumor but HARP 3.0 gave hope to millions of non-government insured, underwater homeowners. Don’t get me wrong, HARP 2.0 is the best thing to happen to homeownership since the VA mortgage loan, but it left millions of deserving people out in the cold. When President Obama removed the 125% loan-to-value cap the Home Affordable Refinance Program lived up to its potential…almost. Here’s the latest HARP 3.0 news and something you can do today to help bring HARP 3.0 back from the brink.

HARP 3.0 Was Supposed To Happen But…

Turn on the TV and the news is filled with fallout from the fiscal cliff deal and gun control. Talk of HARP 2.0 is a distant memory from 2012. The program, which helps underwater homeowners refinance home loans that were until recently too toxic for lenders, is the last thing on anyone’s mind in Washington.

Who is the Home Affordable Refinance Program for?

As I mentioned, the biggest letdown of HARP 2.0 was that it did nothing to remove the requirement that your home loan be backed by Fannie Mae or Freddie Mac prior June 1st, 2009. If your home loan isn’t backed by the government and is privately held by someone like Wells Fargo or Bank of America you’re out of luck.

If President Obama and Congress remove the government insured mortgage requirement with HARP 3.0 it would help millions of deserving, financially responsible homeowners.

Here’s a list of groups of homeowners that stand to benefit from HARP 3.0:

  • Self-employed Homeowners
  • If you’re self-employed and can verify your income with tax returns and bank statements but can’t qualify for refinancing because of your loan-to-value ratio HARP 3.0 could help you.

  • Homeowners With Bad Credit Mortgage Loans
  • If you’re underwater in a sub-prime mortgage the deck has really been stacked against you. Changes to this government refinance program offer a glimmer of hope but have yet to materialize.

  • Jumbo Mortgage Holders
  • Much like underwater sub-prime mortgage holders, there’s not much more toxic to lenders than an underwater jumbo mortgage loan.

  • Stated-Income Mortgage Loans
  • If you purchased your home with a stated-income home loan and cannot qualify for refinancing based on verified income HARP 3.0 could help.

There are millions of underwater homeowners in the U.S. left out in the cold with the original government refinance program and HARP 2.0 that stand to benefit from a newly revised Home Affordable Refinance Program.

Wait, I thought you said HARP 3.0 was dead?

Any proposal in Washington that isn’t getting lawmaker attention is dead, so to speak. With gun control on the forefront of the Whitehouse’s agenda there’s little hope for HARP 3.0 coming anytime soon. Also, HARP is set to expire at the end of this year unless extended by the President or Congress.

I realize this isn’t the news you were hoping for but there are things you can do to help yourself in the absence of a revised Home Affordable Refinance Program.

Keep calm and carry on…

What’s an underwater homeowner to do? First of all, keep making those mortgage payments on time.

In fact, make all of your payments on time including those credit cards. Spend some time reviewing your credit reports for errors. You can get free copies of all three of your credit files by visiting the government-mandated website AnnualCreditReport.com. If you find mistakes all three credit bureaus (Equifax, TransUnion and Experien) process online disputes. Dispute all inaccurate or outdated information you find in your credit reports.

Finally, maintain the highest possible credit score by keeping the balances on your credit cards below 30% of your limit. This is doubly important for any store charge accounts.

You can help resurrect HARP 3.0

There’s a petition circulating social media today calling for President Obama to formally extend the Home Affordable Refinance Program and allow reHARPING. This could go along way to getting HARP 3.0 back on the minds of lawmakers in Washington.

You can find the petition on the WhiteHouse.gov website under “We the People…” using this link:

https://petitions.whitehouse.gov/petition/make-formal-request-fhfa-eliminate-securitization-cut-date-harp-eligibility-and-allow-re-harping/BlPYbvZw

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Home Affordable Refinance Program (HARP 3.0) Coming In 2013

The Home Affordable Refinance Program (HARP) has helped millions of homeowners take advantage of today’s lowest refinance rates while leaving millions more out in the cold. With the election in full swing it’s doubtful that changes to HARP 2.0 will materialize before 2013. Here are several changes people are hoping the New Year will bring to this government refinance program with HARP 3.0.

Home Affordable Refinance Program Update Coming

HARP 2.0 will get a refresh before the existing program is set to expire at the end of 2013. As it exists today the Home Affordable Refinance Program has three basic requirements.

In order to be HARP 2.0 eligible you must meet the following requirements AND can qualify only once:

  1. Your mortgage must be owned by Fannie Mae or Freddie Mac
  2. The government must have backed your mortgage by 6/1/2009
  3. You must have paid your last six and 11 of the last 12 payments on time

These requirements might seem easy to meet; however, almost a third of underwater homeowners have privately held mortgage loans and don’t meet the Fannie Mae or Freddie Mac requirement. If your mortgage isn’t backed by Fannie or Freddie before June 1st, 2009 there is absolutely nothing you can do to qualify.

That’s where HARP 3.0 comes in. The best thing Congress and 2013’s elected President could do is eliminate the requirement that Fannie Mae and Freddie Mac own your mortgage. With millions of HARP 2.0 ineligible homeowners paying six percent or more on their home loans the potential savings is significant.

One of the ideas behind HARP is that by allowing millions of underwater homeowners to refinance with today’s best mortgage lenders it will reduce their payments freeing up cash to stimulate the economy.

Refinance Again Under HARP 3.0?

If you qualified for mortgage refinancing under HARP 1.0 you’re probably paying somewhere near 5% for your home loan. Mortgage refinance rates are in the neighborhood of 3.5% and access to the program again offers significant savings to around a million homeowners.

Unfortunately HARP 2.0 doesn’t allow for multiple mortgage refinancing. The program is limited to one time per household AND per property. If the Home Affordable Refinance Program’s goal is free up disposable income to stimulate the economy these two changes would accomplish just that.

June 1st 2009 Fannie Mae/Freddie Mac Requirement

If HARP 3.0 doesn’t remove the Fannie Mae, Freddie Mac requirement entirely it could remove the cut-off date. This requirement was intended to limit risk for lenders by requiring government backing but the cut-off date does little more than disqualify millions of homeowners.

Ideally HARP 3.0 would allow anyone to qualify for no cash back mortgage refinancing of their home at today’s lowest refinance rates. The program already limits risks and offers enough lender incentives that they have nothing to lose.

HARP 3.0 Fees Could Bite You

If you’re eligible under HARP 2.0 or could become eligible when the program changes in 2013 watch out for lender fees. Part of the incentives used to encourage lender participation is free range when it comes to certain fees.

The more you pay closing on your new home loan the less benefit you’re getting from the lowest refinance rates. Paying more at closing for things like the loan origination fee, processing fee, application fee and rate lock fee means it’s going to take longer to break even recouping your out-of-pocket expenses.

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You can learn more about getting the best deal for your HARP 3.0 refinance without paying unnecessary lender fees or points by checking out my free Underground Mortgage Videos.

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HARP 3.0 Updates for Non-Government Insured Homeowners #MyRefi

Are you frustrated with President Obama’s Home Affordable Refinance Program? The requirement that Fannie Mae or Freddie Mac insure your mortgage is preventing millions of underwater homeowners from qualifying under HARP 2.0. The new program dubbed HARP 3.0 hasn’t passed yet but momentum in Washington seems to be building. Here’s an update on what we know about HARP 3.0 to date.

HARP 3.0 For Non-Government Insured Mortgage Loans

The basic requirements for the Home Affordable Refinane Program today are as follows:

  1. You must have less than 20 percent equity in your home. (You’re underwater or very close).
  2. You must not have any late payments during the past six months.
  3. Fannie Mae or Freddie Mac must have insured your loan no later than June 1st, 2009.

The last requirement is what HARP 3.0 (called #myrefi by the Whitehouse) is expected to remove. The program would also be open to people with underwater jumbo mortgage loans.

Who is HARP 3.0 For?

When the new program is officially introduced it is expected to target these specific underwater borrower types:

  • Self-employed homeowners with stated income home loans that have verifiable income on their tax returns.
  • Homeowners with sub-prime mortgage loans that would have qualified for prime lending.
  • Homeowners with jumbo mortgage loans that originally borrowed less than $625,000 and live in high cost regions of the country.
  • Homeowners with stated income mortgage loans that are not self-employed.
  • Anyone who has responsibly paid a bad-credit mortgage and can document sufficient income/assets.
  • Underwater homeowners with subprime mortgages that have improved their credit scores since purchasing.

If and when HARP 3.0 passes there are millions of underwater homeowners that would qualify assuming there are sufficient incentives for lenders to approve their application for mortgage refinancing. One problem with HARP 2.0 is that many lenders have their own program overlays.

These overlays are lender enforced requirements for approval above and beyond what the government requires. Many lenders require a minimum credit score and maximum loan-to-value ratios ranging from 105% to 125%. It is believed that new government refinance program will include incentives/indemnification for lenders to approve qualified mortgage applicants without these overlays.

Refinance Mortgage Rate Shopping Is Still Important

If you’ve been waiting on the sidelines for HARP 3.0 to qualify for refinancing, mortgage rate shopping is still going to be important once you’re eligible. Just because you qualify for a government refinance program like HARP 3.0, FHA streamline refinance or the VA Interest Rate Reduction Refinance Loan (IRRRL) doesn’t mean lenders can’t overcharge you at closing.

The most important aspect of any mortgage refinance are the fees you pay at closing. Many homeowners make the common mortgage mistake of focusing on getting the lowest possible refinance rates at the expense of fees. Pay too much and you’ll never break even recouping your out-of-pocket expenses. The most frequently overpaid fees include the loan origination fee and discount points.

Where should you start shopping from today’s best mortgage lenders for HARP mortgage rates? I usually recommend people start mortgage rate shopping with community based credit unions as these lenders tend to offer the lowest origination fees and closing costs. Remember to always compare refinance rates and fees from quotes that do not include discount points when shopping for a new home loan.

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You can learn more about getting the best deal on your HARP mortgage refinance without paying unnecessary fees by checking out my free Underground Mortgage Videos.

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Underwater Mortgage Help Update

Underwater homeowners in the United States currently owe 1.2 trillion dollars more than their homes are worth according to one news source. Considering that the Gross Domestic Product (GDP) of the United States is around 14 trillion dollars this problem is of epidemic proportion. Is there underwater mortgage help for the average homeowner?

Government Underwater Mortgage Help

Government refinance programs like the Home Affordable Refinance Program (HARP) offer a glimmer of hope; however, because lender participation is voluntary this program has yet to live up to its potential. According to economists, nearly 32% of American homeowners are upside down and are in need of underwater mortgage help.

If you bought your home in Las Vegas and are underwater there’s a good chance you now owe double what your home is worth. As you can see from the map above, other large metropolitan areas like Detroit aren’t looking much better.

Good News For Underwater Homeowners?

Economists state that while one in three homeowners in the US needs underwater mortgage help, nine out of 10 of these are keeping up on their payments. The kind of losses from owing more than your home is worth generally only affects the homeowner when they try to refinance or sell their home. Underwater homeowners facing foreclosure typically walk away from their homes.

In his recent State of the Union Address, President Obama is calling for all responsible homeowners to refinance. By responsible he means all those who are keeping up on their payments. If you’re underwater mortgage refinancing hasn’t been an option; however, recent and proposed changes to the Home Affordable Refinance Program (HARP) are trying to change this.

HARP 2.0 & Beyond

The original Home Affordable Refinance Program had a restrictive 125% loan-to-value limit. The majority of homeowners are above the limit to qualify so while the program sounded good on paper, it didn’t help the people that need it the most. At the end of 2012 President Obama announced HARP 2.0 which removed this loan-to-value limit completely.

Has it helped? Unfortunately it’s been too little, too late. Because lender participation in the Home Affordable Refinance Program is voluntary, most lenders have imposed their own loan-to-value limits, many limiting to 105% LTV.

Fannie Mae & Freddie Mac Down & Out?

Another problem with HARP is that in order to be eligible your home loan had to have been picked up by Fannie Mae or Freddie Mac before May 31st, of 2009. If your mortgage isn’t backed by Fannie Mae or Freddie Mac HARP simply isn’t an option for you.

Rumors have it that HARP 3.0 would supposedly eliminate the Home Affordable Refinance Program Fannie Mae and Freddie Mac Requirement; however, proposed legislation found in the Responsible Homeowner Act of 2012 still requires that your home mortgage is backed by Fannie Mae or Freddie Mac.

What’s a responsible homeowner to do? Keep making your payments on time and shop for lenders that don’t enforce their own loan-to-value requirements for HARP. Community based credit unions are a good starting point for underwater mortgage help.

Click Here For More Details…

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

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