Category Archives: refinance

Lost Your Job? You May Qualify for Reduced Mortgage Payments!

FNMA and FHLMC
Loan Forbearance Policies

Did you lose your job? Suddenly, through no fault of your own, you are faced with trying to make your mortgage payment with severely restricted income. This program is designed to help someone exactly like you!

This is a Federal program under the Making Home Affordable programs. There are all kinds of programs that the Federal government is sponsoring. They all have the same goal—to get you to keep your house and get you payment relief.

This program in particular is a forbearance plan, where the lender will reduce the amount of your mortgage payment for a specific time. The lender will either cut the payment or reduce it to zero for 6 months. This extra time will allow you to look for a job and get back on your feet again.

There are rules, of course, like every Government program. Here is a list that sums all these up nicely:
· Must be PRINCIPAL RESIDENCE.
· Does NOT apply to second home, vacation home, or investment property.
· Must prove job loss.
· The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
· This plan does not apply to properties financed with an FHA or VA mortgage.
· Must show that job loss has caused financial hardship and will lead to default.
· Must show limited or no cash reserves to make monthly payments.
· Housing expenses must be more than 31% of gross income, before taxes.
· You don’t have to be current with your mortgage payments to apply.

It’s very important to understand what forbearance is and what it is not. It is NOT a principal reduction plan. For instance, if the property is over-leveraged or under water and you owe more on the property than what it is worth, it’s important to understand that the loan amount is NOT reduced. Also, it’s a “time out” only for a specific time frame. Once the forbearance period is over, you will have to make up all the missed payments in full. Your lender will work with you to develop a payment plan that will specify exactly how much you have to pay each month and how long it will take to repay.

A couple of other things to note are that your lender CANNOT foreclose on the property while the forbearance plan is in existence. As long as you are making your payments as agreed, the foreclosure process stops during the forbearance plan. Also, the lender cannot charge you any late fees while the forbearance plan is in existence, as long as the payments are made as agreed.

The nicest thing about this program is that it allows the servicers a lot of freedom. A “servicer” is the bank or company that your mortgage check goes to each month. The servicer does not have to ask permission of FNMA or FHLMC to grant the forbearance. They can grant it for 6 months w/o getting pre-approval. After 6 months, the servicer must ask FNMA or Freddie Mac for permission to extend the forbearance.

If you are interested in this program and feel that you meet the criteria, the first thing to do is find out whether you have a FNMA or a FHLMC loan.

Check if FNMA owns your loan: www.fanniemae.com/loanlookup or call 1-800-7FANNIE.

To check if Freddie Mac owns your loan: www.freddiemac.com/mymortgage or call 1-800-FREDDIE.

You can also ask your servicer. Talk to your servicer about your job loss as early as possible. The earlier you get assistance, the more options you have. Have your financial information in front of you when you talk to your bank. Before the bank offers you any option, they will want to know: how much is coming in (salary); how much is going out (mortgage & other housing expenses); other bills and debts (credit cards, car payments, child care, alimony, child support, food, student loans, etc.) , whether you are current or behind on all these bills.

For more information about these programs, go to www.efanniemae.com or www.freddiemac.com. For more housing options offered by the Federal Government, go to www.makinghomeaffordable.gov or call 888-995-HOPE (4673). This is a toll-free number that reaches HUD-approved housing counselors. This service is completely free to you.

Or, you are most welcome to contact me. My phone number is 909-972-1616 and my email address is docrealtor45@gmail.com. I’d be happy to help you in all the ways I can.

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HARP Refinancing Explained

Have you been faithfully making all your mortgage payments yet watched your equity wither away?

Have you been feeling like the Federal assistance programs have nothing to offer you?

Well, think again! The HARP Refinance Program may just fill the bill for a lot of homeowners who are current, but find themselves boxed in on all sides. They are current on all their payments and may be struggling to pay the mortgage, yet they are unable to refinance into a lower cost loan because their property values have fallen. Sounds like you? Well, read on.

The HARP (Home Affordable Refinance Program) is a Federal government program that is designed to help homeowners refinance their current mortgages into a more stable fixed-rate loan product. The mortgage must be owned by FNMA or FHLMC (Freddie Mac). It is important to understand that HARP IS NOT a plan that gives you principal reduction. In other words, you will still owe the same amount of money on the property. You will just be getting a more stable loan with a lower interest rate and more affordable payments.

This is a very new program and most lenders and mortgage brokers won’t be actually doing any HARP refinances until March 2012. But it may be advantageous to get your application in early, so apply now! Don’t be discouraged if your lender doesn’t have any information yet. For more information, visit www.makinghomeaffordable.gov or call 888-995-HOPE (4673).

Or contact me via phone (909-972-1616) or email (docrealtor45@gmail.com). I’d be delighted to put you in contact with mortgage brokers I know who will be doing HARP refinances.

HARP is a limited-time program and will end on December 31, 2013.

Below are the most frequently asked questions about HARP. If you have any further questions, please feel free to ask.

FAQs
How would I know if my mortgage is owned by FNMA or FHLMC?
If you are not sure if FNMA or FHLMC owns your loan, here is a place to start:

Check if FNMA owns your loan:
www.fanniemae.com/loanlookup
Phone: 1-800-7FANNIE

Check if Freddie Mac owns your loan:
www.freddiemac.com/mymortgage
Phone: 1-800-FREDDIE

What are the eligibility criteria to qualify for HARP?
~ You must be current on your mortgage. You cannot qualify if you are in default.
~ The property must be a residential property that is 1 to 4- family, so a single-family home, duplex, triplex, and 4-plex would all qualify.
~ The mortgage must be owned or guaranteed by FNMA (Fannie Mae) or FHLMC (Freddie Mac). The mortgage must have been sold to FNMA or FHLMC on or before May 31, 2009.
~ The mortgage cannot have been already refinanced under HARP previously.
~ The loan which is being refinanced cannot have any prepayment penalties or balloon payments.
~ The loan which is being refinanced cannot exceed the conforming loan limits of the area where the property is located. (See the next question to find conforming loan limits of your area.)

Please understand that eligibility doesn’t mean that you are automatically approved. You have to go through the application process and have the loan go through underwriting, just like every loan and every refinance does. The homeowner has to qualify with respect to income and other debts and credit score, and the property has to qualify as well, with respect to value and condition.

How can I find if my loan is within the confirming loan limits of the area where my property is located?
In most counties in the U.S., that limit is $417,000 for a SFR (single family residence). It’s higher ($625,500) for very high cost areas. To check out your county, go to: http://themortgagereports.com/loan-limits Choose “conforming loan limits” from the drop-down menu.

I am current on my mortgage payments but I had some late payments in the past year. Would I qualify?
You cannot have any late payments at all in the previous 6 months, and you cannot have more than 1 late payment in the past 12 months.

Can I qualify if my house has no equity?
Yes! The property may or may not have equity.
(Equity = Fair market value – Mortgage Balance).

Would my investment property qualify for HARP?
Yes! You can use the program for your primary residence, a residential investment property, or a second or vacation home. HARP is not designed for any commercial properties.

Would I qualify if I have junior liens?
Yes, you can. However, the junior lien holders (2nd, 3rd mortgage or HELOC, etc.) must agree to remain in a junior lien position.

Do all lenders participate in HARP?
No. Lenders are not required to participate in this program. You will have to ask your lender if they participate in HARP.

My lender doesn’t participate in HARP. What should I do?
You can choose any participating bank to refinance under HARP. You don’t have to work with your current lender.

Are there any fees involved?
As with all refinances, there are fees and closing costs involved that will vary from lender to lender. In order to incentivize homeowners to pay off their house debt sooner, there will be much lower closing costs and lower interest rates if you refinance into a 15- or a 20-year loan instead of a 30-year loan.

What would my new interest rate be under a HARP refinance?
The interest rate will be based on the market rates at the time of the refinance, and will vary from lender to lender and over time. It’s a good idea to make a spread sheet and keep track of different programs and rates and costs offered by different lenders, so that you can choose the best program for you with the lowest costs.

What is LTV and how does it affect HARP? Are there any limits?
LTV means “Loan to Value.” If your house is worth $300,000 and you have a mortgage that is $150,000, then you have 50% LTV. Loan/FMV x 100= LTV.

If you refinance into a fixed-rate loan with a lower interest rate and lower payment, there are now no longer any limits on LTV.

If you are refinancing into an adjustable rate mortgage, you cannot exceed 105% LTV. For instance, if your house is worth $100,000, the maximum loan amount is $105,000 if you are refinancing into an adjustable rate mortgage. It is important to keep in mind that even though the HARP guidelines have no LTV, many banks will have their own guidelines that may differ from HARP.

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For homeowners who are current on mortgage payments, HARP Refinancing may bring a huge relief

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