Tag: harp refinance

How to Refinance a Home Loan


Want to save money on your mortgage? Refinancing might be the best way to take advantage of the historically low rates. Depending on your goal, make make great financial sense to refinance your mortgage. Here’s what you need to know to make the best decision.

Benefits of Refinancing your Home Loan

Before you refinance your home loan, it is important to determine your financial goals. Do you want a lower interest rate? Do you want to change your adjustable rate mortgage to a fixed-rate mortgage? Do you want to pay off your loan in 15 years instead of 30? Do you want to lower your monthly payments? Did you know you can also refinance to consolidate a first and second mortgage? You can also extend your current loan to cash out if you want to start a business, help a family member in financial crisis, or go on an expensive vacation.

Do the math.

Ask your loan officer to help you figure out how much refinancing will cost you, and how much you’ll save over the long term. If refinancing will save you $200 per month, but you have to pay $2,000 in closing costs, you’ll break even in 10 months. How much longer do you plan to stay in the home? If you plan to stay there for more than 10 months, refinancing may be a good idea. If you’d like to move out sooner, the costs associated with refinancing may not be worth it. Also, if you lower your interest rate but extend your loan from a 15-year to a 30-year, you’ll lower your monthly payments but end up paying more interest over the life of the loan.

Talk to a loan officer to review your mortgage refinancing options.

If you decide refinancing is right for you, start by calling loan officer. He or she may be able to save you on closing costs and other fees by recommending a loan program specifically for your situation. Before you start the process it is important to do your research to find the best loan option to meet your goals. Do not just settle for what your current bank offers just because you have a car loan or checking account there; let your lender know that you’re shopping for mortgages so you can make an informed decision and perhaps he or she will find a way to offer a better deal.

Know your refinancing options.

Find out if you are eligible for any special refinance programs that may benefit you over the standard refinance mortgage. For example, if you currently have an FHA loan, you may qualify for an FHA streamline refinance, which would allow you to refinance with no appraisal, no income, and little to no closing costs. If you currently have a conventional mortgage, you may qualify for the Home Affordable Refinance Program (HARP), which may allow you to refinance, regardless of your home’s value, with no out-of-pocket costs.

Expect to gather documentation and paperwork.

Refinancing your home loan is a process that usually comes with a significant amount of paperwork to document your income assets and passed credit. Do not be overwhelmed by the request for documents with the current laws and underwriting guidelines. Even those with perfect credit have to provide the same documentation to get a home loan or mortgage refinance.

When you work out the details of your refinance mortgage, your loan officer will help you navigate the steps from initial loan consultation to closing. Be prepared to provide documentation, including driver’s license, social security card, one month of paystubs, two months of bank statements, past two years of W-2 statements, and your current mortgage statement.

Once you sign your application and send in the documentation, your loan officer will send in your file for underwriting, which may require additional documentation. You may also be required to complete a home appraisal. When you’re finally approved in underwriting, you’ll be cleared to close. Your loan officer will review the final figures, you’ll have to pay closing fees and documents, and then the process is complete.

Steps to Refinancing your Home Loan

1) Initial Mortgage Consultation
2) Sign application
3) Send required documents – (drivers license, social security card, 1 month paystubs, 2 months bank statements, past 2 years w2 statements, current mortgage statement)
4) Underwriting Process
5) Complete the Appraisal (if required)
6) Clear to Close – (once fully approved in underwriting your loan will be “Cleared to Close” and scheduled for closing)
7) Meet for the Home Loan Closing

For more information about what Riverbank Finance offers for refinancing, schedule an appointment with one of our loan officers by calling 800-555-2098 or fill out our online refinance application or by completing the form below.

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What to do After You Get a Low Appraisal on Your Home

Measuring home's value with appraisal.

Mortgage Basics 101: What Is A Home Appraisal?

According to the Appraisal Institute an appraisal is a professional appraisers opinion of value. In today’s mortgage and lending environment a home owner or buyer cannot get through the mortgage process without getting one of these valuable reports unless the homeowner utilizes one of the few specialized refinance loan options. These reports are prepared by appraisers for the lender. The lender needs to see this report to ensure the money that they are lending out is backed by the proper collateral. The appraised value of your home serves as the basis behind the mortgage company giving you the money in the first place.

Appraisals can be very important tools a home buyer can utilize when determining what a houses value is. A homebuyer can be in the middle of a purchase and get their appraisal and become relieved once they see it comes in higher then the sale price which allows them to have instant and unexpected equity. On the other hand the potential home buyer may find that the appraised value comes in much lower then the purchase price and therefore back out of the deal if they feel the house is not worth their investment.

Related: Check your home’s value: Michigan Home Value Estimator

An appraisal typically contains a homes site size and value. A homes square footage, bedroom count, bathroom count, number of levels to home, type of view, design type of home, quality if construction designation, actual age of home, detail if there is a basement and square footage of basement, heating and cooling elements of the home, energy efficient items, porch/deck/patio, and special details on the home for instance if there is a fireplace or pool.

There are some key details which may help boost the value of your home. First, the old saying of location, location, location really helps. If the house is located in an affluent part of town, in a good school district, or on a body of water that typically helps boost the value. On the other hand if the property is located underneath an undesirable area, has a bad view and is outdated then that can help decrease your homes value.

What Happens When A Home Appraises For Less Than Your Loan Amount?

When a homeowner is refinancing their mortgage many loans require that the home be appraised to meet the loan-to-value requirements of the bank or mortgage company. With the downturn in the economy a few years back, your home’s value is never a guarantee. If the home appraises for less than what you owe then you are considered underwater on your mortgage. This means that you owe more than your house is worth for your current mortgage.

If you are underwater on your home then you should ask your loan officer about programs that you may qualify for allow a high LTV or do not have value requirements altogether such as the FHA Streamline Refinance or a HARP Mortgage.

The FHA Streamline Refinance is a refinance option for homeowners that currently have FHA financing. This loan option does not require an appraisal for approval therefore a low value should not be an option.

For conventional mortgages, the HARP Refinance Mortgage is an option to investigate and see if you qualify. This loan option has no limit on the LTV and most times does not require an appraisal at all.

Is my home worth more than the purchase price?

Typically, homes appraise for whatever the listed sales price is in today’s market. The value has to be substantiated by comparable sales in your area. Potential homebuyers and sellers are much more educated then they used to be because there is so many sources of data they can rely on pricing a home.

Please call to see how much home you can afford by contacting a loan officer at Riverbank Finance today at 800-555-2098 or request information below:

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Federal Housing and FInance Authority

The Home Affordable Refinance Program (HARP) has been extended again and will no longer expire on the original date of December 31 of 2012. Federal Housing Finance Agency (FHFA) has announced the extension of the program designed for homeowners that have been unable to refinance due to their underwater mortgages.

The extension was announced to continue the damage control and efforts to reduce losses for Fannie Mae and Freddie Mac, the government sponsored entities that were bailed out following the economic collapse.

What is the Home Affordable Refinance Program (HARP)

HARP was created through an announcement from the Obama Administration near the end of the year in 2009. The programs allows homeowners with mortgages owned by Fannie Mae and Freddie Mac to refinance to lower interest rates even if they owe more than their home is worth. The program supports high loan-to-value (LTV) ratios and requires limited documentation for homeowner to qualify. Many times an appraisal is not required for a HARP refinance.

When does the Home Affordable Refinance Program expire?

Following the announcement form the Federal Housing Finance Agency (FHFA) the HARP program will now expire on December 31st, 2015. The two year extension of the Home Affordable Refinance Programs is expected to allow millions more homeowners to reduce their mortgage payments to the current historically low rates. Since the program’s inception in 2009, HARP refinancing haw allow over 2 million borrowers to drop their rate and terms.

“More than 2 million homeowners have refinanced through HARP, proving it a useful tool for reducing risk,” said FHFA Acting Director Edward J. DeMarco. “We are extending the program so more underwater borrowers can benefit from lower interest rates.”

Due to the overwhelming success of the HARP program, HARP 2.0 was announced removing LTV requirements and making qualifying easier. Since HARP 2.0 announcement in the fall of 2011, more banks and lenders have expanded their guidelines and allowed HARP refinancing for their current loans.

Apply for the HARP refinance program

Contact the experts and knowledgeable mortgage officers at Riverbank Finance today to check out the latest mortgage rates and have your questions answered about HARP today.

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HARP Refinancing Beat 2012 Estimates

HARP refinance chart

HARP refinance chart courtesy of Housingwire.com

HARP refinancing beat 2012 estimates with nearly 1.1 million loans closed last year.  Fannie Mae and Freddie Mac released a report for the Federal Housing Finance Agency confirming last year totaled nearly half of the 2.2 million loans completed since the HARP program was announced in 2009.The majority of homes were primary residences with 1.89 million while 69,522 others reduce their payments on second homes and 199,672 dropped their rates on investment properties.The states with the most HARP refinance loans since 2009 were California with 301,327 refinances, Florida with 175,686, Illinois with 147,252, and Michigan HARP Refinance loans rounding up the top HARP states with 144,709 loans completed.

Underwater mortgages can benefit through the HARP program to reduce their mortgage rates and terms by completing a refinance. Most borrower do not need an appraisal even if it is concluded that they owe significantly more than their home is worth.  Some lender add overlays limiting the loan to value ratio at 125% while other allow Unlimited LTV HARP Refinancing.  This means that even if your house is valued at $100,000 and you currently owe $200,000 (200% LTV) you would still be able to qualify if you are working with the right lender.


Bank or Broker for a HARP Mortgage Refinance?

bank loan officer or mortgage brokerMany people have the misconception that to qualify for the Home Affordable Refinance Program they must contact their current servicer to refinance when they are underwater.  This is not the case.  While your current servicer or bank may be able to offer one option to drop your payment, many times they do not offer the programs necessary to complete a refinance through the HARP program.  After all do they really want you to refinance and lower your interest rate when they directly benefit from keeping you at a high rate?

Not sure what we are talking about, read our previous article: What is HARP?

Many of our clients here at Riverbank Finance have been turned down for the HARP program by their bank or other banks and get discouraged that they will not be able to drop their interest rate and payments to today’s low levels until they call us.  There are many qualification and eligibility factors that are involved in refinancing your home through the government’s Making Home Affordable Program (HARP).

For more information on General HARP eligibility read: HARP Eligibility

These factors include who actually owns your mortgage (it is most likely not the bank that collects your payments), how much your house is worth verses what you owe (Loan-to-Value ratio), if you have mortgage insurance, and of course the other general loan requirements such as how much you make verses what you pay out (Debt-to-Income ratio), credit scores and how much money you have in the bank (assets).

With all these factors that are taken into consideration when determining eligibility for the HARP program the chance that you may qualify with the bank that you are currently at based on their single set of guidelines is very slim.  This is why many people are more successful refinancing their home using a mortgage broker that works with several different banks that have different guidelines that they allow.

Let’s take who owns your mortgage for example.  Most loans are actually owned by the GSE (Government Sponsored Entities) Fannie Mae or Freddie Mac.  They then select a servicer to collect your payments so your payments might be paid to Bank of America, Citi, Wells Fargo, Chase or other large banks.  They collect your payment, keep a percentage for themselves then send the payment to Fannie Mae or Freddie Mac.  If your loan is owned by Freddie Mac and your bank doesn’t offer refinancing for Freddie Mac loans then your loan is denied instantly.

A mortgage broker, however, may have several banks that refinance loans owned by Fannie Mae and also have several banks that refinance loans owned by Freddie Mac.  The variety of options with such a specific program as the Home Affordable Refinance Program is a huge benefit for a homeowner that want to lower their mortgage payments to today’s low rates.

These days, mortgage brokers are a win-win for borrowers.  They offer several refinance programs homeowners and most of the time they are not charged a fee to have the mortgage broker do all of the work.  They may even be able to offer no cost loans which are nearly nonexistent by going through a bank.

To get started on a HARP refinance with a leading Mortgage Broker complete the form below and we will be glad to help you review your eligibility and loan options with you at no cost or call us today at 1-800-555-2098.

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15 Year HARP Refinance

Refinance your mortgage to a 15 year term with a HARP refinance.Many homeowners that have purchased their homes and have been paying their mortgage down payment after payment are unsure if they should refinance back to a 30 year mortgage. With the goal of someday retiring, starting up another 30 year mortgage may not be an option for your financial plan therefore you should look at a 15 year HARP refinance.

Refinancing your mortgage to a reduced term will save you thousands of dollars in interest not only due to a lower interest rate, but also because you will be through with your payments much faster. It is the goal of most homeowner to be debt free and pay off their mortgage. Reducing your term on a refinance can be a key step in your plan.

Benefits of a 15 year HARP loan

There are several benefits to refinancing to a 15 year mortgage through the HARP program. As previously discussed, if your reduce your loan term you will save several years of interest. Secondly, the shorter the term, the lower the interest rates will be. Lenders have less risk as you agressively pay down your principal balance which allows them to offer more attractive financing rates. Lastly, with a shorter term, you will build equity quickly. Should you sell your home after a few years you will have more money in your pocket as compared with a 30 year loan term.

HARP 2.0 now allows for mortgage lenders to transfer your mortgage insurance to a new loan at a lower rate. If you did not put down a 20% downpayment when you purchased your home then chances are you have PMI. Unfortunately you cannot get rid of PMI through the HARP program however you can still take advantage of lower rates without having that 20% equity.

Many of our clients also have 2nd mortgages which may be preventing them from refinancing their 1st mortgage to lower rates. With new HARP guidelines, we are able to subordinate your 2nd mortgages and complete the refinance. On a 30 year mortgage there is no combined loan to value (CLTV) however on a 15 year loan HARP guidelines limit the combination of your 2 mortgages to 105% of your home’s value.

If you think you may benefit from a 15 year HARP refinance and would like to get more information complete the form below or call a loan officer today at 1-800-555-2098. We will be glad to give you a free 15 year loan quote.

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