Home Affordable Refinance Program HARP Expands Eligibility
 

by Miranda Marquit   

With mortgage rates at record lows, many are interested in refinancing. Indeed, refinancing can improve your monthly cash flow, providing you with extra income as your monthly payments are reduced. A lower interest rate can mean a lower monthly payment, as well as savings of thousands of dollars in interest charges.

However, there are many lenders who won’t refinance homes that are under water. In order to encourage lenders to refinance homes, the government unveiled the Home Affordable Refinance Program (HARP) in 2009. However, some homeowners did not qualify under the program requirements. As a result, in an effort to make the program more accessible, changes were announced to the program.

Expanding the Eligibility Requirements
One of the biggest changes is that the cap on the loan to value ratio has been lifted. In the original requirements, any home that had a loan to value ratio of more than 125% was ineligible. However, now, if you meet other requirements, you might be able to refinance even if you owe more than 125% of the value of your home. This can be helpful for homeowners who live in areas where the home values have plummeted by quite a bit.

Before, in order to be eligible for HARP, missing a mortgage payment was not allowed. Now, as long as you haven’t missed a payment in the past six months, it won’t disqualify you if you missed a mortgage payment in the last 12 months. The program has been extended through December 31, 2013, and gives time for homeowners to work to meet eligibility requirements for an eventual refinance.

Another change meant to provide advantages to homeowners is the way that fees have been cut for some borrowers. Under old rules, shorter-term loans sometimes carried higher fees than expected. The new rules cut borrower fees so that those wishing to refinance to shorter terms can do so without incurring extra expenses.

Eligibility Requirements for HARP
Not everyone is eligible for HARP, however. In order to qualify, you must have a mortgage owned by or serviced by Fannie Mae or Freddie Mac. Additionally, you must owe at least 80% of the value of your home, and meet the payment requirements. If you have already refinanced using HARP, you won’t be able to get another HARP loan with the program.

As you can see, HARP is designed to help those who wouldn’t normally be able to refinance do so. And, of course, the mortgage payment requirements mean that only those who have been largely responsible in making their payments are eligible. Indeed, the program is aimed at those whose home values have fallen, and those who wish to refinance so that they can improve monthly cash flow.

Realize that it will be a couple more months before lenders can start implementing the new HARP requirements in some cases. Contact your lender to learn whether or not you are eligible, and to find out when the new guidelines will be followed. In the meantime, you can prepare to make yourself as attractive as possible to lenders by improving your credit score, and remaining up to date on your mortgage payments.

 

Prepare for Pricier Mortgages
by California Real Estate Magazine

Buyers across California may already be feeling the effect of pricier mortgages as the current loan limit expiration date of Sept 30, 2011, fast approaches and lenders prepare for the reduced loan limits.
That is when the maximum FHA, Fannie Mae, and Freddie Mac conforming loan loan limits are schedule to drop to $625,500 from the current $729,750 limit, and the formula for determining an area's median home price is reduced from the current 125 percent of the area's median home price to 115 percent.
 

At press time, efforts were being made to persuade lawmakers to keep the higher limits enacted in 2008 as part of an economic stimulus package in place.

Some lenders, including Bank of America, stopped accepting applications for loan amounts that will exceed the Oct 1 maximum as early as July 1,

A California Association of Realtor analysis has determined that more that 30,000 California families will face higher down payments, higher mortgage rates and stricter loan qualification requirements if conforming loans limits are reduced.

"by reducing the conforming loan limit, thousands of California home buyers will be shut out of homeownership, " Beth L. Peerce, the state group president.

Mortgages over the conforming limit are considered jumbo loans, and can't be purchased and securitized by Fannie Mae or Freddie Mac. Typically, non-conforming or jumbo loans carry a higher mortgage interest rate than a conforming loan and require a higher down payment.

Overpricing a Home
 

But We Want More Money
When the average seller sits down to interview real estate agents, it's easy to get caught up in the excitement over choosing a sales price. More money means more financial opportunities for the homeowner. Perhaps it means the seller can afford to buy a more expensive home, help pay for her child's college education or take that greatly overdue vacation. Unfortunately, uninformed sellers often choose the listing agent who suggests the highest list price, which is the worst mistake a seller can make.