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Derick Condron

HARP 2.0

Friday, August 10, 2012 - Article by: Derick Condron - Right Start Mortgage - Message


The governments Home Affordable Refinance Program has been out and has been used by many for the past couple months. Many of the people I have spoken to leading up to this program were skeptical, at best, about this program.

The comments ranged all over the board.

"They say there is no LTV requirements but I will believe it when I see it. How can they not care about how under warter I am?"

"The government always makes it sound great but no one ever qualifies"

"There are going to be huge cost that they haven't told us about"

These are a few of the ones I hear the most.


Here are some the major perks that have relieved those major concerns

?Fannie Mae and Freddie Mac are giving us an appraisal waiver in the automated approval findings. This means they don't care what your loan to value is, no appraisal, they assign the value used for the refinance.
?This is not one of those pie in the sky loan products that only a couple people will qualify for. If you would be approved for a refinance in terms of credit, income, and assets you are going to qualify. Even some of those that in a normal situation would have no chance to refinance because their debt to income ratio has a chance. As I mentioned in my first HARP 2.0 post, Fannie Mae and Freddie Mac are looking at different things to give the approvals
?Fannie Mae is allowing borrowers to roll all of the closing cost into your final loan amount. You can close these files with no cash to close. So it will allow you to make payments on credit cards or other debt you have been pushing off trying to stay current on your mortgage.
?Freddie Mac is allowing borrowers to roll the lesser of 5,000 dollars or 4% of the loan amount into the loan amount for closing costs.
?Interest rates and closing cost on this program are competitive. Yes there is a small cost for allowing someone with a loan to value of say 150% to do a refinance. This cost is capped and within a reasonable area that many people are just paying the typical closing cost with not large discount or origination charges added.
One of the other concerns I heard the other day was that someone was looking to do a HARP deal and their payment actually was going up. There are a few logical explanations for this.

1.The client has requested to change the terms of their mortgage from a 30 year fixed to a 15 year fixed.
2.The client has an adjustable rate mortgage. In this case right now you are probably paying a phenomenal rate base on the index being at nearly zero and depending on what your margin is set at, are looking at a lower interest rate than what anyone can offer on a 30 year fixed mortgage. This is great for the short term. If you plan to stay in this house for a long period of time though that index rate is going to climb as it does so will your payment. So take advantage of today's record low rates and lock it in for 30 or 15 years.
Are you still on the fence about refinancing? I can run a few different comparisons for you. It may not be the best option for you but you can know that until we look at it. I am a resource to help you make a financial decision. If that is to refinance then I will help you do that!!! Fill out an application with us today to start the financial analysis

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