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 five years ago, 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 recent 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.
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."
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.
Very inaccurate reporting on this article. Every interview is with an online mortgage company who are notorious for their lack of expertise, minimal personal service and high sales pressure. Anyone who wants to refinance should be looking for a professional, local mortgage lender, preferably with references from someone you trust.
It's very disturbing that such a report would be distributed by a legitimate news source. This is an advertising piece masquerading as news. I know because I'm a local mortgage banker with a journalism background. Please find a lender who lives and works in your home town. There are plenty of local loan officers who know all about the HARP program and all the other legitimate loan programs available.