The HARP Refinance loan program is still unclear but the basic gist of the plan is that, if a borrower is refinancing into a fixed-rate home loan, there will be no equity requirement. Stated differently, the appraised value won't matter; the government loan program wants to help borrowers get fixed-rate loans which they can afford. If the new loan is an adjustable rate mortgage (ARM), the maximum LTV will be 105% of the appraised value.
An Automated Valuation Model (AVM) will be the preferred valuation determination but a full appraisal may be required. There are no restrictions to the amount of negative equity . A home owner could owe $400,000 on a home that is only valued in today’s market for $300,000.
Income verification is required for the HARP refinance program. If the original mortgage was underwritten and funded, as a a stated income loan, the borrower will have to provide proof of income to be approved for a new HARP loan.
There are substantial "risk-based" origination fees, for new loans with a term exceeding 20 years. Those "risk-based" origination fees are waived for terms of twenty years or less. The reasoning behind that guideline is that a lower rate, with a lower term, should not have a material impact on the payment amount when compared to the existing payment. The accelerated amortization however, should establish equity for the home owner more quickly and reduce the risk to the government-insuring entity.
If the existing loan doesn’t require PMI (Private Mortgage Insurance), the new loan won’t require it either. If the existing loan requires PMI , there will be no change to that PMI however, the “transfer” of your mortgage insurance policy may require an extra step. Make sure that I know that you currently pay PMI and tell me that amount.
FHA , USDA, and VA loans are ineligible for HARP. Only loans, which were sold to Fannie Mae or Freddie Mac, prior to May 31, 2009 are eligible. This means that it is highly likely that loans closed, in 2009 or thereafter, are ineligible. To determine if you are HARP ekigible, check these two sites:
HARP is not designed to delay, or stop, foreclosures. It’s meant to give homeowners who are current on their mortgages, and who have lost home equity, a chance to refinance at today’s low mortgage rates. Home owners may not have used the HARP program before and must be current on thier mortgage to refinance via HARP. Borrowers may not have had any late payments in the last six months.
Only rate-and-term refinances are allowable. No cash out refinances are allowed. Borrowers can refinance an investment property or vacation home with HARP, even if the home was once a primary residence. Condominiums can be financed on the HARP refinance program but the lender will require that all warranties from the HOA are satisfied.
HARP refinances first liens only. All junior liens must be subordinated to the new first mortgage. Mortgage balances can be increased to cover closing costs but loan amounts may not exceed the local conforming loan limits ($625,000).
If you are HARP-eligible, you must close on your mortgage prior to January 1, 2014. Please call me today, at (858)-777-9751, so we can determine your eligibility, qualify you for a HARP refinance, and take advantage of the program as soon as it is authorized for fundings.