What are your odds of getting a HARP 2.0 refinance?

April 4, 2012 by 1 Comment

UPDATE SEPTEMBER 4, 2012: Odds are back to being a little tricky if you have a Freddie Mac securitized mortgage….bummer!  Most of my lenders are limiting us to 105% LTV for Freddie Mac and unlimited LTVs for Fannie Mae.

UPDATE MAY 12, 2012: ODDS ARE GREATLY IMPROVED!  We are now working with several lenders who are allowing expanded (unlimited) loan to values, including mortgages with existing private mortgage insurance and lpmi (as long as the mortgage insurance can  be transferred).  For a quote on a HARP 2.0 refi for your home located in Washington, please contact me.

Many home owners who have been patiently waiting for the expanded guidelines offered with HARP 2 to become available have found frustration. I’m being told that we are going to have the ability to originate HARP mortgages for my clients beyond 105% loan to value “soon” but as of the publishing of this post, I’m still limited to 105% LTV based on Fannie or Freddie’s estimated value of your home.  

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UPDATE 4/19/2012: Mortgage Master Service Corporation is adding several lenders who are allowing us to do unlimited loan to values! Stay tuned – I’ll have an exciting announcement soon!  

UPDATE 5/12/2012: WE’RE COOKING WITH GAS! WE NOW HAVE LENDERS WHO ALLOW EXPANDED LTVS WITH APPRAISAL WAIVERS FOR HARP 2.0.

Click here for your rate quote for your home located anywhere in Washington.

HARP 2 is the Home Affordable Refinance Program which is available to home owners who have their mortgage *securitized by Fannie Mae or Freddie Mac prior to June 1, 2009.  *NOTE: this is different than who you make your mortgage payment to (your mortgage servicer).

This program is intended to be a giant band-aid with our housing by allowing qualifed home owners to refinance their underwater mortgages, reducing their mortgage payment and/or term and hopefully stimulating the economy with the extra cash flow. Many are supposed to qualify without having an appraisal – it’s intended to be a streamlined process. It is streamlined and available…for some. For many it may feel like throwing spaghetti on the wall to see what sticks.

What are your odds of obtaining a HARP 2 refinance? It depends on what your scenario looks like. I’ve successfully closed many HARP 2 refinances without (and with) appraisals for both Freddie Mac and Fannie Mae securitized loans. Here’s what I can tell you now (remember, this is my opinion and subject to change…hopefully soon). This is not intended to discourage you from trying to obtain your HARP 2 refinance.

Your odds are strongly in your favor if your loan to value on your first mortgage is 105% or lower and if you do not have any private mortgage insurance. Zillow has seemed to be fairly accurate for estimating value. However the ultimate say on if the value is acceptable to create an “appraisal waiver” is Fannie Mae and Freddie Mac.

Your odds improve more if your mortgage is securitized by Fannie. Freddie seems to be a bit pickier with approvals and sensitve towards new debts or debt to income ratios. 

Second mortgages or HELOCs have not been a huge issue [knock on wood]. Most second lien holders have been cooperative and agreeing to subordinate their lien position – even without an appraisal.

Private mortgage insurance is still not where it needs to be with the HARP program. If you have any type of private mortgage insurance, this is an additonal “layer” to work with for your loan approval. The pmi company needs to agree to have the insurance transferred to the new loan and the new lender needs to accept the new pmi.  With pmi, your coverage amount will stay the same AND private mortgage insurance companies treat the transferred coverage as a “new loan” (you may be stuck with that pmi for a while on a new HARP loan).  Your odds are better with pmi if your loan to value is 95% or lower.

UPDATE 5/12/2012: HARP 2.0 mortgages with private mortgage insurance are not as much of an issue as long as the existing private mortgage insurance can be transferred or if the lpmi can be converted to borrower paid mortgage insurance. Most private mortgage insurance companies are agreeable and we work with lenders who are accepting transferred mortgage insurance. 

Odds are worse if your the company who holds your pmi is United Guarantee. UGIC is not cooperating as much as the other pmi companies. UGIC is participating in HARP, however they are not waiving the reps and warrants on the original file. Therefore they request and require the original package from the current mortgage servicer and it takes a lot longer than the other MI companies.

Current odds are [NOT] lower if you have LPMI (lender paid mortgage insurance). Your best bet may be to try your existing mortgage servicer to see if they can help you with your HARP 2 refi. It’s my understanding, some mortgage servicers are refusing to help their very own clients with this program.  Depending on the type of lender paid mortgage insurance (how the premium was structured) it may be fairly simple to help you with HARP 2.0.  Just like regular pmi, as long as the private mortgage insurance company allows it to be transferred and be “borrower paid” (some lpmi loans can be coverted to bpmi – borrower paid), we have lenders who will accept the pmi. YOU DO NOT HAVE TO GO BACK TO YOUR BANK OR MORTGAGE SERVICER WITH AN LPMI HARP 2.0 REFINANCE.

Again, I looking forward to sharing with you that I have unlimited LTVs and can help any Washington borrower who has pmi or lpmi but it’s just not the case “right now”. We are working on bringing on more lenders who may allow expanded guidelines that other banks seem to be restricting. Currently, I can help most borrowers who need a HARP 2 refi as long as the loan to value doesn’t exceed 105% per Fannie Mae or Freddie Mac’s estimated value of your Washington home.  UPDATE 5/12/2012: With the lenders we now work with, we have no loan to value restrictions for Fannie or Freddie and pmi or lpmi is probably not an issue. 

It’s very frustrating to see the overlays banks and mortgage servicers have put on the HARP 2. Banks are limiting the availability of a program that is designed to help stabilize housing and the economy. This needs to change. HARP needs to be widely available to all home owners who qualify. 

I’m happy to review your HARP 2 scenario for your home located any where in Washington. I have successfully helped many home owners refinance with the Home Affordable Refinance Program, including investment properties and second homes. 

If you would like me to provide a rate quote for your HARP 2 refinance, click here.

I am required to have the language below if I am soliciting your Home Affordable Refi for your home in Washington…and yes, I would love to help you with your HARP (or any) refinance:

Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes.  

If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.

You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites:www.freddiemac.com/mymortgage orhttp://www.fanniemae.com/loanlookup/

Filed Under: HARP - Home Affordable Refi, Refinance Tagged With: , , ,

Considering refinancing your FHA mortgage? Here’s what you need to know NOW

March 9, 2012 by 2 Comments

 

FHAStreamlined

HUD announced dramatic changes to their mortgage insurance premiums this week. If you have been considering refinancing your existing FHA mortgage by doing an FHA streamlined, you need to be aware of a couple of dates and which should cause you to either take action now or wait for your refi. 

 

HUD has finally decided to reduce the mortgage insurance premiums on FHA streamlined refinances.  HOWEVER it only applies to exisiting FHA loans that were endorsed prior to June 1, 2009.  When your loan was "endorsed" is completely different than when your loan closed.  HUD may take several weeks to a couple months after closing to endorse (insure) an FHA mortgage.  You could have closed in April of 2009 and not have your mortgage endorsed by HUD until after June 2009 and therefore not qualify for the reduced mortgage insurance rates.

 

If you closed the FHA mortgage you want to streamline refinance prior to May 31, 2009, contact your local mortgage originator to see when your mortgage was endorsed by HUD.  If your home is located anywhere in Washington State, I'm happy to help you with your FHA refinance and determining your endorsement date. (Currently HUD does not have a way for consumers to access this information that I'm aware of).  IF your mortgage was endorsed by HUD prior to June 1, 2009, you may want to consider delaying your FHA streamlined refinance for a few weeks until June 11, 2012.  Mortgage insurance premiums will be dropped, for those who qualify based on the endorsement date, to 0.01% for the upfront funding fee and the annual fee will be cut in half to 0.55%.  

UPDATE APRIL 11, 2012: WE ARE ACCEPTING APPLICATIONS FOR FHA STREAMLINED REFI'S with reduced mortgage insurance – you DO NOT NEED TO WAIT UNTIL JUNE 11, 2012 TO REFI! 

If your existing FHA insured mortgage was endorsed (or closed) after May 31, 2009, you will want to consider an FHA streamline refinance NOW as mortgage insurance premiums are going up. Remember, it's possible that your loan may have closed weeks before May 31, 2009 and NOT be endorsed by HUD until after the cut-off.  Effective on Case Numbers (this is different than your loan application and may take place after your loan application) issued April 9, 2012 and later, mortgage insurance premiums are going up.  The upfront premium will be 1.75% and monthly is increasing 0.10 for annual mi premiums. In early June, high balance FHA loans (loan amounts $417,001 to $567,500 in the greater Seattle area) will go up an additonal 0.25% for annual mi premiums.

 

Bottom line:  
  • If you closed your FHA loan prior to 2009 with your existing FHA loan, it's probably safe to assume your loan was endorsed by HUD in time to receive reduced MI rates and you may want to WAIT.  
  • If you closed your FHA mortgage from early 2009 to May 2009, you may need to check with your mortgage originator to see when your loan was endorsed.
  • If you closed your FHA mortgage from June 2009 or later, odds are you do not qualify for the reduced rate and, if you don't act quickly (March is your last month) to start your FHA streamlined refinance, the higher mortgage insurance rates could make it so that it's no longer worth while to refinance despite current low rates. REFI NOW if you are interested.

 

Don't delay – check out your options now!  Remember, FHA streamlined refinances do not require an appraisal – it does not matter what the current value of your home currently is.

 

As I mentioned, I am happy to help you with your mortgage needs with homes located anywhere in Washington, where I'm licesned to originate mortgages.

 

Filed Under: Mortgage Insurance, Refinance Tagged With: ,

Refinancing when you have an existing Second Mortgage or HELOC (Updated for 2026)

December 15, 2011 by 62 Comments

Should I refinance now Mortgage PorterRefinancing with a HELOC or Second Mortgage (2026 Guide)

One of the most common refinance questions I’m hearing right now is:

“Can I refinance if I already have a HELOC or second mortgage?”

Short answer: Yes — but how it works depends on your situation.

If you have a home equity line of credit (HELOC) or an existing second mortgage, refinancing is absolutely possible. It just requires a little more strategy.

After more than 25 years helping Washington homeowners with their mortgages, I can tell you this: [Read more…]

Filed Under: Home Equity Loans & Second Mortgages, Refinance Tagged With: , , ,

Refinancing Your Seattle Area “High Balance” Mortgage Over $506,000

October 4, 2011 by Leave a Comment

UPDATE: Please visit our complete mortgage guides for updated loan limits for homes located in Washington state.

If you obtained a high balance mortgage over the current limit ($506,000 in King, Pierce and Snohomish Counties) and missed the opportunity to refinance before the loan amounts were reduced, you may still have some options worth checking out. Especially with Fannie Mae hinting that loan limits may be reduced further in just a few months, effective January 1, 2012. FHA loan limits may be further reduced in 2012 as well. We typically learn what 2012 limits will be in November.  The gap between yesterday’s higher loan limits and conforming/FHA loan limits may actually widen in a few months making most of these scenarios tougher to obtain in 2012. [Read more…]

Filed Under: Refinancing & Home Equity Tagged With: , , ,

Buying a Home with Owner Occupied Financing After Refinancing Your Home as Owner Occupied

October 28, 2010 by 13 Comments

I’m seeing a trend where home owners are refinancing their current home as “owner occupied” and then weeks after closing, try buying another home as “owner occupied”.  You cannot have two owner occupied homes.   It’s really that simple. 

I’ve had a couple of surprised people contact me who thought they could buy a home just following a refinance only to learn by their mortgage originator that they have to finance the new home as an investment property.   Financing an investment property not only offers a slightly higher interest rate than a mortgage for a primary residence, it also has tougher guidelines with higher down payment requirements and greater reserves (savings).  

If you are considering refinancing your primary residence and possibly buying another home, you should discuss this with your mortgage originator as soon as possible.  You will be signing a deed of trust which has language that you intend to occupy that home for 12 months.  Some folks might feel that the “intending to occupy” means that they can refinance as owner occupied and a couple months later buy “owner occupied” and odds are, they will be caught.  It may be purely unintended for this to happen, but be prepared for the possibility the new purchase to be treated as an investment property, even if you’re going to live there. 

If you’re considering taking advantage of the lower home prices and lower rates, you may want to delay your refinance of your current “primary residence” or talk to your mortgage originator about refinancing your current home as an investment property.  Your next purchase might qualify as a second home, however the property typically needs to be about 50 miles away from your primary residence (the one you just refinanced) and it is the underwriter’s call on whether or not the second home “makes sense”…this can be a real grey area.  

Life happens and we know plans change. Be upfront with your mortgage professional if you’re thinking about buying a home.  You may want to ask them to verify with your personal scenario with an underwriter.  Finding yourself in the middle of a transaction to buy your next home and having it declined as owner occupied can be an expensive experience.

Related post:

Is it a Primary Residence, Second Home or Investment Property

Can I Convert My Existing Home to an Investment Property to Buy My Next Home?

Filed Under: Investment Property, Refinance, Residential Purchase Tagged With: , , , ,

FHA Streamline Refi’s with No Appraisal

August 20, 2010 by Leave a Comment

UPDATE: Please check out our current FHA Guide for Washington state homes.

When HUD changed the guidelines for FHA streamlines last fall,I thought they had pretty much stuck a fork in a program that has been very beneficial to home owners who have an FHA insured mortgage loan.  You see, HUD made it to where if a borrower opted to not have an appraisal, they cannot finance their closing cost or reserves/prepaids.  Back then I never thought we would see rates at their current levels.  With today’s rates, many home owners can opt for a slightly higher than “par” rate to have the lender pay for a portion of their closing costs.   In addition, it doesn’t matter what your home’s current appraised value is since there is no appraisal! [Read more…]

Filed Under: Refinancing & Home Equity Tagged With: , ,

The Cash-In Refi

August 5, 2010 by Leave a Comment

You’ve probably heard of a “cash-out” refinance where a home owner is taking equity out of their home for home improvements, debt consolidation or if they’re paying off a second mortgage that was not obtained when they purchased their home.   A “cash-in” refinance is a fairly new term and something I’m seeing first-hand due to the current insanely low mortgage rates.

Freddie Mac reports that “in the second quarter of 2010, 22 percent of homeowners who refinanced tehir first-lien home mortgage lowerd their principal balance…this ties the record for the third highest “cash-in” share since Freddie Mac began keeping records on refinancing patterns in 1985.  The revised cash-in share in the first quarter was 18 percent.”

“Cash-in” means that the home owner is bringing funds to escrow for closing.  Their loan amount is not high enough to cover closing costs and prepaids.   Sometimes home owners, with a healthy savings, will opt to pay for closing costs separately instead of financing it into the new loan but a majority of home owners opt to have the cost added to their payoff amount, thus increasing their original principal balance.   Some are deciding to plunk down enough cash to reach a certain loan amount or loan to value to obtain an improved interest rate.  For example, a Seattle area homeowner with a current loan balance of $575,000 might decide to use $10,000 towards her loan amount to obtain a high balance conforming mortgage rate instead of a higher non-conforming/jumbo rate.  (Current loan limits in King, Snohomish and Pierce County for a single family dwelling for high balance is $567,500).  UPDATE 1/1/2012: Loan limits currently $506,000 for conventional and $567,500 for FHA (and may change following years).

Some home owners are doing this because of loan to value issues–not because they have an extra grand or two burning a hole in their pocket.  I’ve had a few clients who have paid off and closed their home equity lines of credit to qualify.  Or perhaps they have an appraisal come in slightly lower than expected, exceeding the allowed loan-to-value guidelines.  For example, if a home owner in Bellevue was anticipating a minimum appraised value of $380,000 for his home to finance his Home Affordable Refinance loan amount of $399,000 with a 105% loan to value yet his appraisal comes in at $376,000; he could have his loan amount adjusted to 105% loan to value at $393,750, bringing in $5,250 to closing. 

Funds for closing will need to be documented, just as they would a mortgagae being used a home purchase, with statements from the accounts the funds came from.

Frank Nothaft, Freddie Mac Vice President and Chief Economist states:

“Interest rates on fixed-rate mortgages are at 50-year lows, making refinancing attractive if borrowers qualify, and similarly rates on savings instruments like CDs are also very low, which makes the choice of paying down mortgage principal very attractive to borrowers with extra cash reserves.”

I’m happy to review your current mortgage scenario at no obligation to help determine if refinancing makes sense for you.  The only catch is, your property needs to be located in located in Washington state since that’s where I’m licensed.

Filed Under: Refinance, Underwriting and Qualifying Tagged With: , , ,

Refinancing Guidelines Need to Loosen Up for Housing Recovery

June 15, 2010 by 2 Comments

This subject has been gnawing at me for a while and I’m actually surprised I haven’t written about it here before.  In order for the housing market to really start recovering, I believe that the underwriting guidelines need to relax.  Whoa–you say, isn’t that what got us into this mess in the first place?  Well, I’ll argue that it was more of folks being able to buy more than they could afford (via stated income) that drove up prices and put them into homes where they could never afford the the payments over folks who used home equity by consolidating debts or doing who knows what with the cash (hopefully they banked it…in a safe place).

Helping someone keep their home by taking advantage of the lower interest rates prevents a foreclosure or short sale.  Yes, we have the Home Affordable Refinance Programs (HARP) thanks to President Obama–but many don’t qualify and many who do are not taking advantage of this temporary program.   FHA Streamline refinances now require an appraisal OR no closing costs can be financed–how is that better for American home owners during this time? 

If it were up to me, I would make it possible for home owners who have demonstrated they pay their mortgage and debts on time and who have documented steady employment to have their appraisals waived and closing costs financed so they don’t have to dip into their hard earned savings to finance their refinance.  Now this does happen sometimes with Fannie Mae’s HARP program…but not with Freddie Mac (which requires an appraisal and limits closing costs) and not with FHA.

Why penalize home owners who’s property values have plummeted because their neighbors sold their homes via short sale, lost it due to a legitimate foreclosure or plain walked away from their obligations?  Why punish home owners who have been making their payments and who qualify on every other point EXCEPT the appraised value?  If their payment is being reduced, it helps stabilize the neighborhood and reduces the risk of default for the mortgage servicer.  Loan to values need to be eliminated on rate-term refinances where a tangible benefit for the home owner exists.

We also need to eliminate the securitization factors of when Fannie or Freddie bought the existing mortgage for it to be eligible for a HARP refi.  I recently had a client where it showed on Fannie Mae’s site that he indeed has a mortgage owned by Fannie Mae–it was not until we received an error message trying to underwrite it through DU (the automated underwriting system) that we called Fannie Mae to discover that the loan had been securitized (purchased by Fannie Mae) one day too late to qualify (March 1, 2009).  This person’s loan closed in December 2008, was sold the the bank and then took months for Fannie Mae to purchase.  This means this upside-down home owner does not qualify to reduce his payment by $250 per month.  Imagine what the $250 a month would do for him and/or the economy.  It gives him some probably needed monthly financial wiggle room and he just might spend a little more which helps our economy too.  (Loans need to be purchased/securitized by Freddie Mac no later than May 31, 2009 to qualify).

These are just a few thoughts that have been a bee in my bonnet… or worse!   Don’t get me started on home owners with existing mortgages that have private mortgage insurance hitting a brick wall when trying to do a HARP refi (most pmi companies are not cooperating) or not being able to include second mortgages (even “purchase money”) in a HARP refi.   Or how FHA insured loans will soon be more expensive for borrowers seeking to refinance or purchase with the increase of the annual mortgage insurance premium.

Please contact your elected officials in Congress if you have had issues with obtaining financing…they are making originating loans tougher and tougher as I write this post. 

I’m afraid it’s going to get worse before it will get better.  Many people who need help and who would qualify for the refinance with exception of the appraisal…are not able to get it.  Many don’t want to risk the cost of the apprasial (around $500) to attempt a refinance in these economic times.

Filed Under: Rant, Refinance Tagged With: , , ,
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