HARP Refinance Program Needs More Than a Deadline Extension
Rumors have been swirling for some time that adjustments might be made to the current HARP 2.0 guidelines, says Kirk Chivas, chief operating officer at First Commerce Financial, a mortgage company in Wixom, Mich.
For instance, some borrowers could benefit from a later loan-origination-eligibility date or the ability to use HARP more than once, says Chivas. The current guidelines require loans to be originated on or before May 31, 2009 and restrict HARP to one refinance per borrower.
Chivas says some lenders have loosened their LTV guidelines, raising maximums from, say, 105 percent to 135 percent or 125 percent to 150 percent. “As home values have continued to increase, that has helped,” he says.
The inability to use HARP twice is a source of frustration for borrowers who tapped the program when mortgage rateswere higher than they are today. “They HARP’d already and took a rate of, say, 5 percent,” Chivas says. “They’re not pleased because they feel that they pulled the trigger too early.”
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First Commerce Financial has officially been named a 2012 Constant Contact “All Star” for striving to help homeowners via their Michigan Mortgage Blog. They continue to comfortably help the customer with their mortgage and home finance needs.
“The neat part is that our customers noticed and responded positively to our communication with them.” says Ken Turkington, President of First Commerce Financial. “Our number one goal is to inform the customer in a comfortable manner that will help them with all their mortgage needs. We can’t thank everyone enough for the support that they have given us!”
One catch to refinance through HARP, says Kirk Chivas, chief operating officer at First Commerce Financial in Wixom, Mich., is that your loan must have been originated on or before May 31, 2009.
To lower your DTI, you’ll need to earn more money or pay off some of your debts. Often, however, neither of those approaches is realistic. “Typically, there’s no solution,” Chivas says. “People have gotten themselves in this position due to poor decision-making or a job loss of one or two people working in the household.”
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One Reason to refinance is to pay off your house sooner with a shorter term.
“Some clients don’t think about the fact that if they’re eight years into their current mortgage, and they refinance into a 30-year loan, they’re basically starting over at 30 years of payments again,” says Kirk Chivas, chief operating officer at First Commerce Financial in Wixom, Mich. “That means 38 years of mortgage payments. If they opt for a 20-year loan instead, that’s 10 less years of paying a mortgage.”
Among other things, you need a copy of a recent home or cellphone bill, showing your name and address.
Some lenders have added this requirement to find out whether you occupy your home as your principal residence, according to Kirk Chivas, chief operating officer at First Commerce Financial in Wixom, Mich.
You’ll probably notice that this list of required documentation is “significantly more comprehensive than it was even a year ago,” says Chivas. Still, the requirements can be met if you keep track of what you need and what you’ve already supplied.
One catch to HARP, according to Kirk Chivas, chief operating officer at First Commerce Financial in Wixom, Mich., is that your loan must have been originated on or before May 31, 2009, to refinance through HARP.
To lower your DTI (debt to income ratio), you’ll need to earn more money or pay off some of your debts. Oftentimes, however, neither of those approaches is realistic.
“Typically, there’s no solution,” Chivas says. “People have gotten themselves in this position due to poor decision-making or a job loss of one or two people working in the household.”
The second obstacle is a condominium questionnaire, which contains information about the complex, condo association and owners, according to Kirk Chivas, chief operating officer at First Commerce Financial, a mortgage loan company in Wixom, Mich.
Condo questionnaires usually aren’t free. Chivas says he’s seen associations charge from $50 to $300 for this paperwork.
The third obstacle is property and casualty insurance in the form of two policies: One that covers the association’s risks and another that covers your risks as an owner. The association’s policy can be a loan stopper, particularly if the coverage hasn’t been reviewed in many years. Chivas says the coverage amount often has to be raised — usually at greater expense — to meet the loan guidelines.
“About 33 percent of the time, there have to be adjustments made to that master insurance coverage,” Chivas says. “It’s an enormous pain in the butt.”
4 ways to get your spouse to say ‘I do’ to a refinance
Start by defining your goals, suggests Ken Turkington, president of First Commerce Financial, a mortgage company in Wixom, Mich.
“Frequently, spouses have different opinions,” Turkington says. “Often one spouse may be more interested in payment relief, and the other spouse may be more interested in reducing the balance or shortening the term.”
Either way, it’s important to talk about the options.
“If the conversation is held jointly, the transaction goes faster and smoother,” Turkington says, adding that the result should be “less anxiety and more clarity” for both partners.
“Schedule a time to have the discussion,” he advises. “Make a point of making an appointment to discuss it, whether it’s five minutes or 15 minutes.”
The waiting period can last one to seven years, says Kirk Chivas, chief operating officer at First Commerce Financial in Wixom, Mich.
Technically, it is possible for a buyer whose prior loan wasn’t in default at the time of a short sale to get a new FHA-insured loan with no waiting period at all, Chivas says. But he adds that he’s never encountered anyone in that situation.
Credit dings can be difficult to sort out for buyers who experienced a loan modification or short sale, in part because, as Chivas says, there’s “no consistency” in how lenders report those events to the credit bureaus.
“They may think they’re fine, but if they’re not talking to a professional, their hopes can get dashed or crushed,” Chivas says. “That’s why you want to speak to someone as soon as you start dreaming it up in your head” that you want to buy a home after a bankruptcy, foreclosure or short sale.
Kirk Chivas, chief operating officer for First Commerce Financial, a mortgage broker in Wixom, Michigan, said HARP’s success is vital because it’s one of only a few lifelines for responsible borrowers.
“When people who have great credit and pay bills on time complain to me, ‘Where is my bailout?’ I say this is your program,” said Chivas, who’s helped more than 100 borrowers refinance through HARP.
The (HARP Guidelines) window is still a stopper for some homeowners, according to Kirk Chivas, chief operating officer of First Commerce Financial in Wixom, Mich., which closed 60 HARP refinances last year.
“I wish they didn’t have it (only) through May 2009,” he says. “I wish it was a forever thing, or at least up through 2010 May, because home values were still declining.””The claims of this particular program (HARP) being a disaster are, I believe, completely inaccurate,” Chivas says.