How to refinance your mortgage
Here are six tips to consider if you're looking for refinancing options outside of HARP.
© Jose Luis Pelaez Inc./Getty Images
When the real-estate bubble burst, the federal government intervened and created the Home Affordable Refinance Program (HARP). Through direct lenders, HARP has successfully helped many homeowners refinance out of high risk, subprime and adjustable rate loans into low fixed-rate mortgages. With the extension of HARP through 2015, the government expects millions more will benefit from the program. (Bing: Check if you qualify for HARP)
"To prequalify for HARP there are two critical requirements of a homeowner and their loan," said George Adair, area manager for Bay Equity Home Loans. "First, your current mortgage must be owned by Fannie Mae or Freddie Mac. Secondly, Fannie or Freddie must have purchased the loan prior to June 1, 2009."
Despite the expanded eligibility guidelines offered by HARP, certain banks and mortgage lenders are reluctant to offer the program to its fullest extent.
As a result, many homeowners who met HARP guidelines were turned down by banks and denied the benefits of the program. This trend has left some homeowners no choice but to look elsewhere to refinance their mortgages.
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"While most banks and lenders refuse to help homeowners who are significantly underwater, we reached out to them and expanded our program," said Tim Carroll, sales manager at Bay Equity Home Loans in Santa Rosa, Calif. Below are six tips to consider when looking outside of HARP to refinance a mortgage:
1. Shop around. The job of the consumer is to find the best APR and the lowest fees. "They vary the most in the mortgage financing industry," said Steve Nakash, national retail manager with Nationwide Direct Mortgage.
2. Maximize your time. Mortgage brokers can check five or six banks to obtain the best rates of the day. "Bigger banks like Bank of America only have access to their own bank rates," said Tim Lucas, a former loan officer and editor of mymortgageinsider.com.
3. Protect your credit report. Narrow your choices down to three lenders before having your credit report pulled by any one of them. "If you get your credit report pulled too many times, it affects your credit score," Nakash said. "If you are not doing business with a particular bank, don't allow them to pull your credit."
4. Determine your mortgage options. "Credit unions are good for short-term fixed-rate mortgages at 10 or 15 years, but for a mortgage more than a million dollars, consider a private bank, especially for a 10-year or seven-year ARM, because the private banking departments of big banks have competitive rates for larger mortgages," said Michael Moskowitz, president of Equity Now, a direct mortgage lender.
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5. Seek continuity. When refinancing with an online lender, request to be handled by only one account representative to avoid being passed around from one rep to another. "Most online lenders will accommodate that," said Nakash, who services eight states online including California, Colorado and Washington.
6. Pay attention. When the loan-to-value ratio is more than 80%, secure mortgage insurance. "If you have a $375,000 loan, 80% would be $300,000," Moskowitz said. "Mortgages of more than 80% must include insurance, according to Fannie Mae, Freddie Mac and FHA requirements."
As usual another Yahoo mortgage article full of errors.
HARP will not help just anybody out of a high risk or subprime loan. It has to be a fannie or Freddie loan. And George Adair may be wrong depending on the time of his quote. The loan no longer has to be owned by fannie or Freddie by June 1, 2009, that has been changed to you CLOSING on your loan before June 1, 2009. The reason many banks and lenders refuse to offer the program to it's fullest extent is that the govt. is backing them up if the loan goes south. Would you lend $200k on a house worth $100k? 1.) APR is a fictitious number easily manipulated which is why you see such variances. Fees definitely effect APR, but so does PMI if your loan has it. The consumers job is to shop for a qualified mortgage professional. it's his/her job to shop for the mortgage. Shopping for a mortgage isn't truly possible for a consumer. I could right a full page article on the reason why. 2.) Mortgage brokers can no longer check the rates of many lenders after you apply, which is the only time you can get a rate. The government essentially took the brokers ability to shop away from them. I know, I was a broker for 15 years. Now a broker has to choose the lender at the time of your application because his Good Faith Estimate has to be tied directly to that lenders fees. I'm with a small Federal Savings Bank, and other than in house lending, we also correspondent lend which is the banking world version of being what formerly a broker could do. This is the perfect sweet spot. Not a broker with my hands tied, and not a big box bank with only in house lending. 3.) Nakash is wrong, to a point. FICO considers multiple pulls by mortgage companies within a short period of time to be considered one inquiry. They call it a "batch" inquiry. Same when shopping for a car loan. Go to myfico.org and check the FAQ's for yourself. 4.) Credit unions are a good source for a car loan, but are now using fannie and freddie for most mortgage products as well. Doesn't hurt to check but don't go in blindly thinking it's the best. 5.) I couldn't agree more. I am with my client start to finish. You may get an occasional email from my processor but it will always state refer to me for questions. 6.) I believe is just a misquote. It should read if you have a $375,000 home value, $300,000 is 80%.
Thank you and have a nice day. RIboater. my mail is hot.
If you are in the process on refinancing or buying I would talk to at least two mortgage companies.
We are a small mortgage broker in Raleigh, NC and have weathered the storm. We have always explained the mortgage process and put buyers in the correct loan.
Mortgage Brokers are the most regulated in the lending environment. We must pass a National Mortgage Test and take mandatory test each year to keep our license.
Larger bank Loan officers do not have to take the National Test or pass exams each year to keep their license.
I would Bing - " NMLS lookup tool" and type your loan officers NMLS# or name, company. You can see his work history for the last 10 years. This should tell you a lot about the person and company you are working with.
JP Morgan Chase Banks is a bunch of thieves and liars! what did I get out of their 25 million dollar fine...nothing! I swear anymore you need a lawyer to look at the paperwork before you sign anything!
Why is Wells Fargo allowed to have underwriting requirements that are more stringent than those of FHWA? I have been working on a modification for over a year and 3 home preservation specialists with a continuous change of requirements.
My wife and I legally separated over a year ago, the mortgage and house were assigned to me by the court and I knew that I would not be able to make the mortgage by myself because I am on SSD disability income. So I applied for a modification to reduce the payment. To be trite, I am so close to just giving up because I am just getting worn down.
I had a loan for a rental property through GMAC and no one would touch the loan to re-finance or modify it so I lost it. The bank also listed it as a foreclosure when it was actually a short sale. The house was upside down in value. Why do I have to have a loan through Freddie Mac or Fannie Mae to get help with my loan through the HARP program? It seems unfair that I cannot get the same help as others.
I would also note that my rates are fixed for the life of the loans (15 and 30 years), are not subject to increase and are not stretched out to 40 years as another poster indicated. I was suspicious of the first 8 mail offerings I got and pitched them but finally decided that if I continued to do nothing, then nothing would change. I made the call and it's all worked out for me. Your mortgage must be a Freddie or Fannie and pre- June 2009, but keep checking. They didn't make the exception to income (rental) properties until Jan. of this year, so we got lucky.
The other most important thing that made it successful was to stay with the same bank. If you go to a different lender, then they can require other things like the appraisal, and income verification....if you keep it in house, they seem to have a slightly different set of lending criteria.
HARP PROGRAM SUCKS!
all they do is spread the loan out to 40 years.
had to take it or loose house. it's 2% for only 5 years, then goes up. i'm going to play the game for few years, then stop paying them again. **** b.o.a.
I agree with this article providing wrong information. When you pull a credit report for similar purchases in a small time window, only the first one is a hit on your credit. After that you can pull hundereds of reports, if they are all for the same thing like a mortgage, within something like a 2 week period of time before another pull will trigger a hit.
But if you pull one for a mortgage app and then another for a credit card app then those would be considered two hits.