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With over 2.9 million homeowners refinancing with the Home Affordable Refinance Program (HARP), there are still many people that are not taking advantage by refinancing their homes. There is a variety of reasons in which these homeowners are choosing not to drop their home loan rates with a mortgage refinance. Many of these reasons are simply myths or assumptions that are made based on their prior knowledge of the refinance process. Tracy Mooney, Vice president of Single-Family Servicing and Real Estate Owned (REO), has taken the time to publish an article debunking these top HARP Myths.
HARP Myth 1: I’ve had my loan for many years, and with HARP I’d have to start all over again with a 30-year mortgage.
Answer: This is incorrect. Borrowers that have had a conventional loan for several years are able to do a HARP refinance and shorten their term. Many borrowers choose to go with a 15 year or 20 year loan and reduce their interest rates while taking several years off their mortgage. A borrower may be able to accomplish this and keep their payment the same as their current 30 year mortgage.
HARP Myth 2: I’m receiving too many solicitations to help me refinance. They must be scams.
Answer: There are several mortgage companies and banks that offer HARP refinancing so these offers may all be legitimate. It is important to note, however, that not all banks and mortgage companies are equal. Most lenders have overlays on top of HARP Eligibility Requirements that prevent them from doing the refinance loan. If you have tried one company and been turned down, it is recommended that you check with another company that may offer programs such as unlimited LTV loans, lower minimum credit scores and both Fannie Mae HARP mortgages and Freddie Mac HARP Mortgages.
HARP Myth 3: I am really underwater on my mortgage. HARP can’t be for homeowners like me.
Answer: HARP has been updated several times since its inception in 2009. Currently both Fannie Mae and Freddie Mac loans allow for unlimited Loan-to-Value (LTV) refinancing. As noted previously, most banks and lenders have overlays and limits for their LTV. It is important to find a mortgage lender that offers higher level LTV refinances for homeowners severely underwater on their home loan.
HARP Myth 4: I recently lost my job, so no one is going to help me refinance through HARP.
Answer: If you have recently lost your job you may still be able to get a lower rate with HARP. Your current mortgage servicer may allow for a HARP Refinance without income in some situations but most lenders will allow you to income qualify using a co-borrower. One of the original borrowers must remain on the loan to qualify. The combined income is what will be used to calculate the Debt-to-Income (DTI). Alternatively, if you have available funds equal to at least 12 months of principal, interest, taxes, and insurance, then you may be eligible without proving income.
HARP Myth 5: My lender doesn’t offer HARP, so I can’t refinance through the program.
Answer: Yes; you may be eligible to refinance through any other mortgage company that offer the HARP Mortgage Program.
HARP Myth 6: My lender doesn’t offer HARP, so I can’t refinance through the program.
Answer: Yes; you may be eligible to refinance through any other mortgage company that offer the HARP Mortgage Program.
HARP Myth 7: I have an adjustable-rate mortgage (ARM), so I am not eligible.
Answer: HARP was created to offer more stable and sustainable mortgage options for homeowners in your very situation. Speak with your loan officer about fixed rate mortgage loans to have long term stability in your payments. Alternatively, you may utilize HARP to extend your adjustable rate mortgage (ARM) for an additional 5 or 7 years at lower rates.
HARP Myth 8: I don’t have enough cash to pay closing costs, so I can’t refinance through HARP.
Answer: Event with a HARP refinance, you may be able to refinance with little or no money out of pocket. For many homeowners, you may be able to roll any closing costs and pre-paid items such as taxes and insurance into your new mortgage. Some lender may also offer options to credit back money to help cover the expenses of closing costs so you truly have a no cost mortgage. Be sure to speak with your loan officer to review what loan options you are eligible for through HARP.
HARP Myth 9: HARP is only for homeowners who are behind on their payments and in danger of foreclosure.
Answer: The Making Home Affordable program offered two home loan solutions for borrowers that were at high interest rates and were previously unable to refinance. The Home Affordable Modification Program allows homeowners that were behind on their loan payments to apply for a modification of their current terms to allow them to save on their payments. This is commonly confused with the Home Affordable Refinance Program (HARP) which is for clients whom have paid their payments on time and would qualify for a conventional refinance if they did not owe more than their house was worth. The HARP program is for borrowers with good credit that simply want to lower their interest rate and payments.
For more information on the HARP refinance program call a licensed loan officer at Riverbank at 800-555-2098 or request information below: