The process of getting a mortgage consists of several stages and typically takes anywhere from 20 – 40 days (or more) depending on how prepared you are, what mortgage program you have selected and if it’s a purchase, the closing date may dictate how long the process will take. The steps below may not take place in the exact order I have listed and some steps may happen simultaneously.
According to Housing Wire, it looks like HARP (aka the Home Affordable Refinance Program) may once again be extended through 2016. The HARP program was created for home owners who have conventional Fannie Mae or Freddie Mac mortgages and who had lost equity in their homes due to the mortgage meltdown, making it impossible to refinance. With HARP, appraisals are often not required and over the past few years, underwriting guidelines have become more relaxed with this program. So why the “so what”?
With the appreciation homes are seeing in the greater Seattle – King County area, home owners who purchased their home a couple years ago using an FHA mortgage may now be able to refinance into a conventional mortgage. FHA mortgages are often used when a home buyer needs a lower down payment option or if credit scores are lower. FHA jumbo mortgages offer home buyers lower down payment with higher loan amounts than what conforming mortgages will permit. There are many reasons why someone might opt for an FHA mortgage when buying a home.
HARP (aka the Home Affordable Refi Program or HARP 2.0) is set to expire at the end of 2015. HARP is a refinance program that was designed to help home owners who have good credit, income and job stability and would qualify for a refi except for the reduced value on their home.
HARP is available to home owners who have a conventional mortgage securitized by Fannie Mae or Freddie Mac (this is different than where you make your mortgage payments to).
Over the past few years, home owners have enjoyed deducting private mortgage insurance (pmi) premiums from their income tax. This is also true for government forms of mortgage insurance (aka funding fee or guarantee fee) with FHA, VA and USDA mortgage loans. This benefit is coming to an end effective on 2014 tax returns.
If there can be one positive tidbit from the government shutdown, it just may be lower mortgage rates. And by the way, we are still originating and closing mortgages during the government shut down. USDA has been reduced to essential functions only and therefore, loans that have not yet been approved USDA may not be closing during this time. However, conventional, FHA and VA loans are available. Not all lenders are able to operate during the shutdown because of not being able to obtain tax transcripts from the IRS, so please do confirm with your lender whether or not this is an issue for your mortgage scenario. Self employed borrowers may find it more challenging during these times.
A problem the mortgage industry has (one of them) is the perception that consumers have about the mortgage process.
- Reduced document loans are pretty much gone unless you want to go “hard money”. Even a “streamlined” FHA refinance is not very streamlined – it’s a “full doc” loan minus the appraisal.
- The lender offering the lowest rate does not mean your loan will close or close smoothly.
- Borrowers need to pay more attention to the knowledge, expertise and professionalism of the loan officer. This is at least equally as important as trying to find the “lowest mortgage rate” [Read more...]
If you have been waiting for Congress to pass HARP 3.0 or have been previously turned down for a refinance because of lost equity in your home, you might consider trying to refinance again.