About Government Refinance and Home Purchase Programs

Several weeks ago the Federal Housing Finance Agency (FHFA) announced that the HARP program would be extended through the end of 2018. In addition, a new program designed to allow borrowers to refinance even if they have little to no equity in their home was announced. This new program looks as if it will function as a successor to the HARP program in the years to come. See more details below and contact us today for more information or an estimate on a government-backed mortgage.

The Federal Housing Finance Agency (FHFA) has announced that the Home Affordable Refinance Program® (HARP®) will be extended to Dec. 31, 2018, continuing to provide liquidity to support eligible borrowers.

In addition, Fannie Mae and Freddie Mac will introduce new high loan-to-value (LTV) ratio same-investor refinance options for loans with note dates on or after Oct. 1, 2017, with a 15-month seasoning requirement. The high LTV refinance option will provide refinance opportunities to borrowers with existing Fannie Mae or Freddie Mac mortgages who are making their mortgage payments on time but whose LTV ratio for a new mortgage exceeds the maximum allowed for standard refinance products.

Under the new option, as with HARP, the refinance must provide a borrower benefit, such as a lower interest rate. Unlike HARP, the new option will not have an expiration date.

In a roundtable discussion with the folks over at Zillow today, President Obama gave some hints that HARP 3.0 might still be a possibility. We get the following quotes from a recent HousingWire article on the event:

The next question that came in to the president asked if there was hope for HARP 3 — a topic that, according to Rascoff, made up about 30% of all the questions submitted — to which the president replied “there should be hope.” According to Obama, HARP 3 was an idea that was strongly support by Mitt Romney’s team, and is something Democrats and Republicans can get together and get done, the president added. …

Finally, someone asked what help is available for homeowners looking to refinance but who don’t have a GSE-backed loan — somehow bringing the virtual roundtable full circle as the president said this is where the HARP 3 program comes in. Keep in mind, this would be good for the entire economy, Obama added. With the extra money saved after refinancing, many homeowners would likely be able to buy that new car they need or finally purchase their children a laptop for school.

The president concluded by encouraging everyone listening to contact their local congressman and voice their support for HARP 3.

HARP 3 is the name given to to the idea of the government opening up a refinancing program for homeowners who are underwater or at least have less than 20% equity in their homes now. Currently, only homeowners who are already in a mortgage backed by Fannie Mae, Freddie Mac, FHA or VA are able to refinance when they have no equity. HARP 3 would open the refinancing option to many more borrowers.

It doesn’t sound like HARP 3 is imminent but the fact that the president is talking about it and asking voters to contact their congressional reps about it is encouraging. Bookmark our site to check back for the latest HARP 3.0 news. And contact us in the sidebar to learn what programs are available already.

The Home Affordable Refinance Program, or HARP program, was initially set to expire at the end of 2013. But today the government agency that oversees HARP announced the highly successful program will be extended for two more years until Dec. 31, 2015.

Ed DeMarco, the director of the Federal Housing Finance Agency (FHFA) said this about the extension of the HARP program:

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

The HARP program applies to conventional mortgages that are currently backed by Fannie Mae or Freddie Mac. There has been speculation that a “HARP 3” program might be launched at some point in order to expand that pool of candidates for the HARP program beyond the current parameters but nothing has been announced on HARP 3 yet.

This two year expansion means there is more time for a HARP 3.0 and other enhancements of the program to get off the ground though, so bookmark this site to get the latest news on the HARP and other government refinance options. Contact us in the sidebar today to learn more about all of the government refinance programs that are currently available.

The Home Affordable Refinance Programs, or HARP, was launched in 2009. The program got off the ground fairly slowly but has been picking up steam ever since. The Federal Housing Finance Agency (FHFA) recently announced that in 2012, 1.1 million HARP refinances were completed. That is as many HARP loans as were completed between 2009 and 2011 combined.

Several factors have contributed to the upswing in HARP refinances: 1) Lenders finally became comfortable with the program and started approving more HARP loans, 2) Interest rates hovered near all time lows for much of 2012, and 3) The HARP 2.0 program went live in the summer of 2012 and that opened the program to many new candidates.

As we progress into 2013, all of the factors that made 2012 a banner year for the HARP program are still in place. Rates are still near all time lows, it is easier now to qualify for a HARP loan than ever before, and the infrastructure to get HARP loans completed is better than ever. Contact us in the sidebar to learn if the HARP program (or one the the other government refinance programs) can help your family.

Prior to the recent state of the union address there was speculation that President Obama might bypass Congress and enact new mortgage relief guidelines through an executive order. The rumored changes, being tentatively called “HARP 3”, were reportedly going to open the benefits of the current HARP programs to borrowers who currently do not qualify for it. But in the speech President Obama gave he made it clear that, initially at least, he would wait to see if Congress could draft and pass legislation to accomplish that goal.

In the current gridlocked environment in Washington it seems unlikely that the House and Senate will be able to agree on any such legislation. It is unclear how long President Obama will wait on this legislation before taking matters into his own hands. Or it is possible that the Obama administration is just bluffing and has no intention of bypassing Congress with a HARP 3.0 program. Only time will tell. But for now we are in a wait and see period when it come to the potential HARP 3.0 program.

In the meantime, there are are several excellent government refinance programs already in full swing. Fill in the contact form on the right to get more info and an estimate.

We might be closer to “HARP 3.0” than expected. The Obama administration is reportedly considering issuing an executive order that would open the benefits of the HARP program to responsible borrowers who have conventional mortgages that are not currently backed by Fannie Mae or Freddie Mac. If this happens it would open the door for hundreds of thousands of homeowners to refinance to the historically low interest rates we are now seeing. Currently, borrowers who have less than 20% equity in their homes have great difficulty refinancing unless they have an FHA loan, Va loan, or a conventional loan backed by Fannie or Freddie. In cases where they still have some equity this currently undeserved group must add mortgage insurance to the loan and in cases where they have no equity they are out of luck entirely. So an executive order opening the benefits of the HARP program would be huge news.

Contact us in the sidebar to get the more information.

While mortgage interest rates are not breaking new records this week they continue to stay down near record lows.

For FHA streamlines (FHA to FHA refinances) the interest rates have been in the mid to low threes in recent weeks. This can vary based on the age of the current FHA loan though. FHA loans that were started in the spring of 2009 or sooner have a special program that allow for lower costs. Consequently, lower interest rates are common with those loans because less lender credits are needed. For newer FHA loans (FHA loans started summer of ’09 or later) the streamline rates have been in the mid threes as well. In both cases it is common for borrowers’ break even on costs to be immediate so contact us in the sidebar today if you have an FHA loan.

On HARP loans, rates tend to be a bit higher. For significantly underwater homeowners with Fannie-Mae-backed conventional loans, most HARP refinances have been coming in between 3.875% and 4.25% in the last month or so. Part of the reason for this is that Fannie and Freddie recently raised their fees in order to remain solvent as companies. For borrowers with Fannie Mae loans who are not upside down on their first mortgage rates are better though. If you have a conventional loan see here to find out if Fannie or Freddie have backed your loan. If you do have a loan backed by Fannie or Freddie, contact us to get more info on the HARP program.

For folks with VA mortgages or with conventional loans that are not backed by Fannie Mae or Freddie Mac, rates are very low as well. VA rates tend to be very close to FHA rates and the VA-to-VA streamline program is even easier than the FHA streamline program. Rates on conventional loans where there is enough equity in the home tend to be better than HARP loan rates. Contact us in the form on the right to learn more about those programs as well.

In his first term, President Obama went to great lengths to try to help the ailing housing market recover by sponsoring or supporting several government refinance assistance programs. The primary refinance program of the Obama administration, the Home Affordable Refinance Program or HARP program, has proven to be a great success after a rocky start. Other programs, such as the FHA streamline program and the VA IRRRL program, have also been very successful over the last four years. In addition, the efforts of the Federal Reserve to keep interest rates low have allowed millions of Americans to refinance to record low rates over the last four years.

While there are not a lot of new government refinance programs on the immediate horizon, it is not too late to take advantage of the record low interest rates and current programs. With President Obama still at the helm the current refinance programs are unlikely being shut down any time soon.

However the clock is ticking on these record low interest rates. Most pundits are predicting that interest rates will be rising over the next 12 months and it is not unlikely that rates will continue rising over the next several years. So if you would like to take advantage of the government sponsored refinance programs and historically low rates available contact us now in the sidebar. There may never be a better time than now.

One of the historical weaknesses of the HARP and HARP 2.0 program has been that there has been very little leeway for borrowers when it comes to their debt to income ratios. In the past, borrowers normally had to show that the minimum payments on all of their debts, including mortgages, car payments, credit card payments, student loans, etc., added up to less than half of the gross income they made every month. So for instance, a borrower who had a monthly debt payment load of $2500 had to prove they made more than $5000 per month to get approved for a loan by the Fannie Mae or Freddie Mac software.

The maximum 50% debt to income ratio has been the rule of thumb for some time. It has made refinancing difficult for a lot of families who are paying all their bills now but for whatever reason (being self employed is one common problem) can’t prove enough monthly income to qualify for the HARP program.

It appears that Fannie Mae at least has begun loosening up on that DTI rule of thumb. We are getting reports that the Fannie Mae underwriting software, called Desktop Underwriter or “DU”, has been approving HARP loans with debt to income ratios into the 60s since the last software update. Of course Fannie can tweak the parameters of the DU software any time so there is no guarantee this change is permanent, but if you have a conventional loan that is backed by Fannie Mae now might be the best time ever to look into refinancing. Interest rates are still hovering near all time lows and it appears that barriers to getting approved are slowly dropping. Contact us in the form on the right to learn more or to seek an estimate from an authorized lender.

Recent figures from the Federal Housing Finance Agency indicated that nearly 100,000 HARP loans were closed in August. That is a huge number for a program that got off the ground slowly. The launch of the HARP 2.0 program last spring was largely the reason for the spike in HARP loans closing. Prior to the HARP 2.0 program the maximum loan to value ratio for HARP loans was 125%. HARP 2.0 removed that limitation and allowed qualified borrowers to refinance to a better rate no matter how underwater they were on their Fannie Mae or Freddie Mac conventional mortgage.

Another reason the numbers spiked in August is that HARP 2.0 loans have been taking much longer to close in many cases than other loan types. Many of the loans that closed in August were probably started in June, May, or even April.

Lastly, the great interest rates we have seen in the last few months made HARP loans even more enticing to many borrowers late in the summer. Those great rates have improved further this fall so if you have an FHA mortgage or a conventional mortgage contact us in the form on the right to learn more about the HARP program or other government-backed mortgage programs.

There has been some buzz on the internet in recent months about a new program being call called “HARP 3” or “HARP 3.0”. So what is HARP 3.0? The short answer is, it is simply an idea at this point. The Obama administration started floating an idea a few months ago about an expansion of the current HARP program. The current Home Affordable Refinance Program (HARP) only applies to conventional mortgages that are insured by Fannie Mae or Freddie Mac behind the scenes. About 70% of conventional mortgages are backed by Fannie or Freddie, but that means 30% of borrowers with conventional mortgages are currently simply out of luck. The primary feature of the new HARP proposal is it would allow those other 30% to take part in the program too.

Don’t hold your breath

The reality of the situation though is that this is an Obama administration proposal that has to be approved by the GOP-controlled congress. That explains why it had no chance of passing leading up to the 2012 election. If Obama wins in 2012 the program has an outside chance of gaining some steam, but even then it would be a long shot because it would require Fannie and Freddie to take on a lot more risky debt and that would be a risk to tax payers. If Romney were to win in November it is not clear what his plans would be to boost the housing markets.

While HARP 3.0 is currently just an idea, HARP 1.0 and HARP 2.0 are up and running. Contact us in the sidebar today to see if you are a candidate for the HARP program or for any other government-backed refinance program now available.

In the wake of the Federal Reserve’s newly announced quantitative easing program, mortgage interest rates have dropped to all time lows again this month. There has never been a better time to refinance.

Please note that the rates borrowers see in the news apply to mortgages where the borrower has plenty of equity and excellent credit. When there is little or no equity or if there are credit problems interest rates tend to be slightly higher. For instance this week rates on 30 year fixed government-backed mortgages for folks with plenty of equity and good credit were coming in at around 3.5% (or even lower in some cases). But in cases where the home is underwater (where the borrower owes more than the home is worth) and the borrower is using the HARP program the risk is higher for the lenders so the rates tend to be higher. Still even in those cases rates are astonishingly low right now. Most HARP 2.0 loans are still coming in at rates in the very low 4’s or even high 3’s this week.

Rates on FHA streamlines have been low too. For people who have FHA loans that were started in the spring of 2009 or sooner, refinance rates have been down in the mid to low 3’s this week with no closing costs added to the new FHA loan. For newer FHA loans streamline rates have been in the mid to upper 3’s.

Beware of false advertising from lenders. Many lenders will advertise rates in the 2’s but won’t mention in the advertisements that rates that low only apply to 15 year mortgages (which have higher payments) or adjustable rate mortgages (ARM’s). If you are looking for a 30 year fixed refinance, rates are in the mid 3’s and higher.

Contact us in the sidebar to learn which government-backed refinance programs are best for your family and to get an estimate.