Home Affordable Refinance Progam 2011 (HARP 2) – Temporary Limitations

 Although HARP II is effective December 1^st and applications can be accepted there are new updates and temporary limitations. Basically, HARP II is going to have two phases.

Phase 1: Effective December 1, 2011

The first phase of HARP II increased the loan to value (LTV) limit to 125%. The previous loan to value limit was 105%, but the new HARP program is increasing the limit. The 125% LTV limitation will be in place through March 2012 until the Desktop Underwriter (DU) is updated.

This meaning that the most you can refinance is up to 125% of the value of your home. There is also no combined loan to value requirement if you have a second mortgage.

As far as an appraisal, it may be required. This phase of HARP II is going to last for until March 2012.

Phase 2: Effective March 2012

The second phase of HARP II will be implemented in March of 2012 after the Desktop Underwriter (DU) is updated. This phase removes all equity requirements. This meaning, there will be no limit for a loan to value ratio and no equity required in order to refinance. There may also be no appraisal requirement as well.

Both are great phases and changes, but it will be limited temporarily on who can benefit from this program based on the loan to value percentage. Once March 2012 hits, the doors will fly open and many homeowners with underwater mortgages may be helped.

For more information on HARP II requirements visit http://www.harp2011.com/.

Brief video explaining the two phases for the newly revised Home Affordable Refinance Program.

FHA loan limits increased- Fannie Mae & Freddie Mac remain the same

Recently the FHA loan limits have been increased. There are different loan limits depending on the area in which you live. For the Riverside and San Bernardino area in Southern California, the loan limits have increased to $500,000. This is good news for homebuyers looking in these areas who beforehand were unable to receive a loan over $355,350. For the Los Angeles and Orange County area the FHA loan limits have been increased to $729,750.

This is the first time that FHA has surpassed Fannie Mae and Freddie Mac loan limits. However, we assume that Fannie Mae and Freddie Mac will follow in line and increase their loan limits as well. Nothing is for certain, but we will keep you updated on the decisions that are made. Until that time comes, Riverside and San Bernardino areas can receive a loan limit with Fannie Mae and Freddie Mac of $417,000. The Los Angeles and Orange County areas have a limit of $625,500.

Here is a chart below showing the loan limits for FHA as well as Fannie Mae and Freddie Mac for the counties in California. If you would like to view Fannie Mae and Freddie Mac loan limits for a different state click here. 

9 Tips to Help You Save For a Down Payment!

Wondering how you are going to afford a down payment for a home? This is a common concern for homebuyers, but we want to provide you with 9 tips to help you save for a down payment. You’ll be able to buy the home of your dreams much sooner.

1. Save

This seems obvious, but the second you start thinking of wanting to buy a home, why not start setting aside money on a monthly or weekly basis. You will see how quickly it adds up. You can enroll for an automatic savings plan with your bank or have a portion of your paycheck get automatically transferred to you savings.

2. Borrow the down payment from your retirement plan

Check the provisions of your retirement plan. You can borrow funds from a 401(k) plan for a down payment or make a withdrawal from an Individual Retirement Account. Be sure you understand the tax consequences, repayment terms and/or possible early withdrawal penalties.

3. Move

Obviously this option is only available for people who already live in a home. By selling your home you may be able to save additional funds if you can move into a less expensive house.

4. Reduce other higher interest rate debt

Debt is stressful, so if you are capable of paying off credit cards with high interest you will be able to start saving. Yes, at first your savings will take a hit and reduce, but the money you will save from higher interest rates will pay-off in the long run. Trust me!

5. Make a deal with the seller

You would be surprised but in some circumstances it is appropriate to ask the seller to carry a second-mortgage to cover your down payment. Typically, you will pay a slightly higher rate for this second mortgage.

6. Sell some investments

7. Get a second job and save your earning

You’ll be putting in extra work but it will be worth it in the end! Focus on your long term goal and understand it’s temporary.

8. Skip a year’s vacation

I know, I know… this seems awful, but try doing a local vacation that does not cost as much money. Also, keep in mind it’s only one year you are giving up a vacation. However, that will put you closer towards achieving your future goal of a new home (where you will make many more memories).

9. Gift from family

Parents and other family members are often anxious to help children buy their first home and may have the means to give you a gift of money for a portion or all of your down payment.

For other down payment tips you can visit our website.

FHA Loan Limits Restored

Last Friday, November 18, 2011, President Obama signed a bill that restored the loan limits for FHA (Federal Housing Administration) mortgages. For homeowners in the Inland Empire area (Riverside and San Bernardino counties) the loan limits went from $355,350 back up to $500,000.

However, this bill only increased FHA loans, and did not include Fannie Mae or Freddie Mac. Currently, Fannie Mae and Freddie Mac loan limits are at $417,000. Keep in mind, President Obama did pass a new refinance program for Fannie Mae and Freddie Mac that will benefit underwater mortgages.

With the loan limits being restored to $500,000 until December 31, 2013, we can expect more home sales within the next two years. Overall the FHA loan limit increase will benefit future homeowners.

HARP 2- Video Update of new program

2011 Home Affordable Refinance Program (HARP II)

On November 15, 2011 the government released the new revised plan for the Home Affordable Refinance Program aka HARP II. Read below for an explanation of what HARP is and if you are eligible for this Home Affordable Refinance Program. We offer a free personalized HARP quote for California Residents only.  

What is HARP?

HARP stands for Home Affordable Refinance Program.  The program is also known as the Making Home Affordable Plan, the Obama Refi plan, DU Refi +, and Relief Reliance. This program was started in 2009 and has recently been revised in order to help those who lost equity in their home and are therefore considered having “underwater mortgages”.

The purpose of HARP is to help the responsible homeowners who lost value in their home, but continued making on-time monthly payments. This program will help those homeowners refinance their mortgage to a new lower interest rate and lower their monthly payment.

Who is eligible?

1. Those whose mortgage was sold to Fannie Mae or Freddie Mac prior to June 1, 2009. Keep in mind, who you make your mortgage payment to does not mean they own your mortgage, they are just simply collecting the payment.
2. Your home loan must be paid on time for the past 6 months and no more than 1 late payment in months 7 – 12.
3. You have not refinanced under the old HARP program. If you refinanced previously with HARP then you are not eligible for the revised plan. You may only use HARP once per home.

When is HARP effective?

Loan Applications are being accepted for HARP on December 1, 2011.

What if I have NO equity (Really far underwater)?

With this program you can never be too underwater. This program is meant to help homeowners like you, that have no equity. The great thing with HARP being revised is it helps homeowners who owe more on their home than it’s worth. There is no LTV (Loan to Value) requirement for those who refinance to a 30 year fixed mortgage.  

What if Fannie Mae or Freddie Mac don’t own my mortgage? Can I still refinance with HARP?

Unfortunately this program is only eligible for those who have a mortgage sold to Fannie Mae or Freddie Mac prior to June 1, 2009. However, there is still a possibility you may be eligible to refinance under different requirements. Fannie Mae Look Up Tool & Freddie Mac Look Up Tool

Am I eligible for the Home Affordable Refinance Program if I’m behind on my mortgage?

If you missed a payment in the most recent 6 months you will not be eligible to refinance under HARP. Also, if you were late once in the past 12 months, then you are no longer eligible to refinance with HARP.

Will the Home Affordable Refinance Program help me avoid foreclosure?

This program does not prevent or delay foreclosures. This program is meant to help homeowners who lost home equity, but still made current payments on their mortgage.

Is there a loan-to-value (LTV) restriction for the revised HARP?

There is no LTV restriction for a fixed-rate mortgage with terms up to 30 years.  That’s the great thing! All homes are eligible for the new HARP as long as u meet the minimum requirements discussed above.

If I refinance with HARP using an ARM, do I still get “unlimited LTV”?

No. The “unlimited LTV” is only eligible for those refinancing to a 30 year fixed mortgage. If you choose to refinance using an ARM (Adjustable Rate Mortgage) then you will have a loan-to-value restriction of 105%.

What’s the biggest mortgage I can get with a HARP refinance?

There are different loan limits depending on your area. Most cities have a loan limit of $417,000. However, there are those few cities that have a loan limit up to $625,000.

Can I do a cash-out refinance with HARP?

HARP is not meant for a cash-out refinance. The purpose of this program is to help those with underwater mortgages to adjust their rate and term in a refinance. You can try to qualify for a different refinance program under different eligibility requirements to do a cash-out refinance.

How do I apply for the HARP program?

You can apply for the HARP program with any lender. If you are a California resident and would like to apply through Stateline Funding Corporation, you can  Use this form to fill out an application and get a free quote from a mortgage broker.

When does the HARP II Program end?

The program has been extended to December 31, 2013.

Do you have to be employed with income to be HARP eligible?

No. With HARP you actually do not need to have your income verified in order to refinance. The only reason you would need to verify your income is if your new principal + interest payment increased by more than 20%. If it increased less than 20% then no income verification is needed.

Is there a minimum credit score requirement to refinance? 

Fannie Mae & Freddie Mac still require their minimum credit score of 620 in order to refinance using the Home Affordable Refinance Program (HARP II).

UPDATE: New HARP Program

The HARP (Home Affordable Refinance Program) is being revised and has some very exciting changes that will benefit anywhere between 800,000 to 1 million homeowners.

The new changes that President Obama is implementing allows homeowners who have “underwater mortgages” to refinance no matter what is owed. This revision removes the requirement of having equity, which caused limitations for many homeowners.

In order to be eligible for the new HARP plan, you must have your mortgage owned by either Fannie Mae or Freddie Mac, and it must have been financed prior to June 1, 2009. Keep in mind, who you make your mortgage payments to does not determine if Fannie Mae or Freddie Mac own your mortgage. Contact a mortgage broker to find out if Fannie Mae or Freddie Mac own your mortgage.

Eligibility Requirements:

1. Purchase loan before June 1, 2009

2. Owned by Fannie Mae or Freddie Mac

3. Must be Current on your mortgage

4. No late payments in the last 6 months

5. No more than 1 late in the past 12 months

Once more information is published about the new HARP program, we will update as soon as possible.

How You Can Benefit From Obama’s Revised HARP Program

This revised HARP (Home Affordable Refinance Program) is going to open up HUGE windows of opportunities for 800,000 to 1 million homeowners. With this new revised plan, homeowners who have “Underwater Mortgages” are eligible to refinance to the new low interest rates and reduce their monthly payments. There are so many questions regarding this new plan and we want to try to answer some of them for you!

What is the revised HARP Program?
This program is allowing homeowners who have been unable to refinance due to lack of equity, the chance to refinance and receive a lower interest rate.

Who is eligible to refinance?
Homeowners who financed their home from May 31, 2009 or prior. Eligible homeowners must live in the present home that is being refinanced. This program is only available to those who financed with Fannie Mae or Freddie Mac. If you refinanced your home with the old HARP program then you are not able to refinance again. You must also have no late mortgage payments in the past 6 months, and no more than one 30 day late payment in the past 12 months.

How long is this program available?
This program has been extended to December 31, 2013.

What is the benefit of refinancing?
The main benefit for homeowners to refinance their “underwater mortgage” is to lower the interest rate and monthly payment to avoid foreclosure.

Keep a look out for a video in the coming week of a more detailed explanation of the HARP program as we wait to hear more information.

True Cost of Waiting to Buy a Home

Waiting to buy a home, when interest rates are extremely low will actual cost you more money in the end. Let me explain why.

Cost of Waiting Scenario 1

It makes sense to want to wait for house prices to drop before purchasing a home. However, while waiting, you aren’t considering the fact that interest rates may increase during that time. How do increased interest rates affect your home purchase?  Take a look at the chart below.

As you can see the house price did decrease, but so did your buying power. If you would have purchased your home when the interest rate was at its lowest, you would have been able to buy more for your money. Instead, this scenario results in  $37,000 less in buying power for the same mortgage payment.

Cost of Waiting Scenario 2

This second scenario shows the cost of waiting while risking an increase in interest rates. As you can see, a 2 point increase in interest rates increases the monthly payment for the same priced home by $311.

The overall TRUTH in the cost of waiting to buy a home,  is the best time to buy is now! The market is in the best position for homebuyers with the lowest interest rates we’ve seen in over 50 years!

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Should you rent or buy a home?

Should you rent or buy a home?

Why do so many people insist on renting a home or apartment before considering the options of buying? What many people don’t know is that owning a home has many more benefits when being compared to renting. Also, people don’t know that they can actually OWN a home that is either the same price or in some cases cheaper than paying for rent. I think the automatic perception of being a homeowner is that you can’t afford the payment. Well, I am here to let you know that is just not true.

Monthly Payment: Rent vs. Own

When renting, the monthly payment you make is basically being thrown out the window and making no investment in your future whatsoever. However, you are benefiting your landlord because you are basically paying their mortgage payment for them. (Which shows you actually can afford to pay for a mortgage).

You are not building any equity as a renter, but your landlord is building equity in their home.

When owning, you are making a monthly payment that is building wealth for your future. You are contributing to paying off your home and you are also building equity as your home value appreciates overtime. (Yes! Homes are still increasing in value overtime)

Risks: Rent vs. Own

When renting, you risk the monthly payment increasing overtime. You may also risk eviction for reasons such as the homeowner wanting to sell the home you are renting, or simply move back into it.

When owning, you have a fixed monthly payment. (Your payment will NEVER change). You will have financial stability knowing that there is no risk in the monthly payments increasing.

Tax Benefits: Rent vs. Own

When renting, you have NO tax benefits whatsoever. If you are renting a home, then your landlord actually receives all of the benefits you would have received had it been your own home.

When owning, you receive so many benefits as a homeowner it is crazy. Current tax codes really favor homeowners. As an owner you can deduct all the interest you are paying on your mortgage. You can deduct the property taxes you are paying on your mortgage. Also, if you decide to sell your home, all the capital gains you receive are not taxed. It is pure profit!

Are you still wondering if you should rent or own a home? I think you know the right answer.