As I began talking to a potential client yesterday, he promptly told me he did not qualify because he was upside down on his home. This is something many homeowners have been faced with due to the erosion of equity over the past 4 years. He owed $239,000 on his home and the comparable sales were coming in at $180,000 due to short sales and foreclosures in his area.
I ran his address through Fannie Mae’s Loan Lookup Tool and his loan was owned by Fannie Mae. Moving one step further, I submitted his loan application to Fannie Mae’s underwriting engine and not only was his loan approved, there would be no appraisal needed for him to complete the refinance. He is going to save $650 per month when the loan is completed. My client had not refinanced his home since 2007 and his rate was 6.75%!! It seems like every day I speak to homeowner’s here in California and they are unaware that these options exist.
Fannie Mae and Freddie Mac rolled out the Home Affordable Refinance Program (HARP) back in 2009, but some very important updates were made to the program in 2012. Because the program has been around for 3 years, many homeowners are unaware of the HARP 2.0 updated guidelines.
[pullquote style=”right” quote=”dark”]For example, if you have a Freddie Mac loan, their automated underwriting engine will determine the value of your home and if your loan is approved, there is no need for an appraisal.[/pullquote]
The same goes for a Fannie Mae loan. The Loan to Value cap of 125% was lifted so even if you are 200% upside down (or more) you may be eligible. In addition, you do not need perfect credit to qualify for this program. Typically, you need to be current with your mortgage and some lenders are tighter than others regarding your auto and credit card payments.
[message type=”warning”]If you have been declined due to your debt to income ratio in the past, new HARP guidelines may allow your ratios to be over 50%. One of my clients was approved with a 61% debt ratio.[/message]
If you have tried to refinance, but were declined a year or even 6 months ago, the changes in the NEW HARP program might get you an approval today.