Your Questions About Mortgage Refinancing Programs

Michael asks…

refinancing your mortgage?

is this a bad thing to do? how long should you wait before refinancing? and how does it lower your payment?

John answers:

What i will stress to you first and foremost is that everyone is America is in different situations financially..

Wha tmight be good for you, may not make any sense for another…

Whether or not a refinance makes sense depends on what you are looking for..

What is the reason you are thinking about refinancing? Do you want to pay off debts? Do you have an adjustable rate? Do you have a high rate? Are you looking to get a lower payment?

There are many different reasons why people refinance their home.. So whether or not a refinance makes sense for you really depends on what you are trying to accomplish..

As for how does a refinance save you money…there are many ways..

If you get a lower rate of interest, it will obviously lower the monthly payment obligation.. If you pay off debt that has high interest rates, or high payment obligations for that matter, it to could save you money…

There are also specialized programs like interest only, and Option arm programs that can give you more flexibility with LOWER payment obligations..

What i would suggest to you is that you consult with a professional to discuss your situation. They will look at YOUR credit, YOUR income, YOUR finances, etc. And give you exact figures as to what YOU wualify for..

Until you do that any response here will simply be speculation, and assumptions… Without knowing what you even want to accomplish, no one can accurately gove you advice..

My name is Jason Fry, I work with Providential Bancorp, a nationwide mortgage lender.. I ahve been in the mortgage industry for 8 years, and would be happy to give you more advice..

Feel free to call me at 312-264-6448, or email me at jasonf@providential.com.. I will give you an analisys, and you can decide from there if htis makes sense for you..

Look froward to hearing from you!

Jason Fry
Senior mortgage specialist
Providential Bancorp
312-264-6448

Paul asks…

Freddie Mac Mortgage?

I have gone through a divorce. I got the house. Court orders states that I must re fin within two years.
Needless to say, my credit score has not allowed me to qualify. When I went to apply for refinancing
I was turned down, but was told my mortgage was sold to Freddie Mac. What does this mean for me? Will it help me with trying to refinance in the future? Will it effect the present interest rate? I have made every payment,on time or before due date, on this mortgage for the last 4 years. I can make the current payment with no problems. I just have to have my ex husbands name off of the mortgage. Can his name be removed without refinancing.
Thanks Glenn for your response. The house has been deeded to me ( court ordered) and I can sell without his signing. He does not have claim in the house. The only thing that has his name on it, is the mortgage and I am responsible for the payment, should I not make a payment, the mortgage company could go after him, but he doesn’t have claim to the house ( court ordered).
J S – THANKS SO MUCH !!!!! This information has been so helpful. God bless you !

John answers:

You should be able to refinance with the HARP program. You don’t have to buy out a divorced spouse, the other answer is dead wrong. You can remove a divorced spouse with the HARP program and you can refinance with little cost. Refinancing will also lower your rate to current market which is under 4%. See this page for actual details on the Making Home Affordable program: http://HARPSupport.Org.

David asks…

HARP 2 Refinance.. My current lender won’t work with me, and won’t drop my Mortgage Insurance!?

I’ve already paid down my original balance below 76%. I’ve made 2 written requests to have them drop my PMI, but they deny it until I get an appraisal that will show the current value is more than what I owe on my mortgage… Well, I’m not wasting $300 on an appraisal that will show that the value has dropped :( Where are the lenders who are willing to help with HARP 2 refinancing? I’ve never missed a payment, My credit score is 826, but my home is underwater. I really want to refinance with HARP, but the PMI issue is getting in the way, and I hate my current mortgage servicer. I’m looking for a way to transfer my mortgage to another company. I’m a very responsible home owner, I just want a better mortgage rate.
HELP! How can I find a mortgage lender who will work with me and get me away from my current mortgage“servicer”?

I’ve been trying since November to work with my current company, and they have had all of my paperwork for 5 months but they are no use at all. I need to look at other options ASAP.
Thanks!
PS., I’m in the NW suburbs of Chicago.
My original loan was sold to Greentree Servicing, a couple years ago, and they are terrible! I want to get back to an actual “LENDER”
For the jerk that just gave me a hard time….. I have held up every part of my contract agreement! The servicer is arbitrarily telling me I need an appraisal, and holding me hostage with PMI. My agreement with PMI is that I pay it down, and then it gets dropped. I paid it below the required amount. Don’t tell me I haven’t done everything I was supposed to do! I’ve asked them to send me supporting documents to show me the clause & stipulation saying I can’t drop it, yet they can’t provide it.

John answers:

Harp 2 seems to be a good program. I’m going through it now.

Here’s the thing with Harp 2 – you get what you got.

Which means, if you have a Fanny mortgage with PMI = you get a Fanny mortgage with PMI.

If you have a Fanny mortgage with no PMI = you get a Fanny mortgage with no PMI.

You can NOT go through Harp 2 and go from Fanny mortgage w/ PMI to Fanny mortgage w/o PMI.

So what you want is not possible.

Your lender is not doing you wrong. And you can do a Harp 2 re-fi with any lender. You don’t have to use your current one. I am b/c my closing costs are less but you don’t have to.

When it comes to dropping PMI: it does not matter if you have 80% of the original loan amount. You have to have 20% Equity in the home.

If you are underwater on your home then you have 0% equity. That’s because you owe more on the home than it is worth. No lender will drop PMI. You don’t qualify to drop PMI. Period.

I had PMI on my loan. About 2 years ago, I called up my mortgage lender to get the PMI dropped.

I had to Pay for an appraisal. (yep..$250–$300 is about right). So their charging you for an appraisal is standard. Perfectly normal. And it has to be an appraiser they send out that comes randomly selected from a list. This is a law change to prevent the fraud that contributed to the whole housing mess we are in now.

If the home does not appraise high enough for you to have 20% equity then the PMI won’t be dropped. Your loan does not qualify. Since you know that you are underwater, there is not point in trying to drop the PMI. Your loan won’t qualify for any lender.

When my home appraised a couple of years ago it was $1000 short of the 20% equity requirement. So, I sent them a check for $1000 to principal and dropped my PMI. This put my loan to value at just under 80%.

Since then, homes in my area have not sold and values have dropped. If my home were appraised today, it would appraise for about $5000 less than it did two years ago. As such, My Loan to Value is about 84%.

(Note: it’s “Loan to Value” meaning the amount of your loan compared to the current value of your home. Not Loan to Original Loan Amount”. They don’t compare your current loan to how much you borrowed originally).

So, I am going through Harp 2.0.

Since my Loan To Value is over 80% I qualify. I also have a high credit score and have never missed a payment.

Since Harp is “you get what you go” – I don’t get PMI even though my current Loan to Value is over 80%.

Other advantages to Harp 2 – you have reduced closing costs. They don’t use an appraisal on your home. They use the value assigned by the Fanny or Freddy database. In my case, they are rolling my closing costs into the loan.

It’s an expedited underwriting process.

But Harp 2 has some other things you need to be aware of.
1. You can only re-fi through Harp once. So if interest rates go lower 2 years from now…you can’t use Harp again.

2. You can’t do a cash out re-fi.

The purpose of Harp 2 is to allow homeowners who have been responsible (you and me) but whose homes have dropped in value to take advantage of the current low interest rates and re-fi. Because our Loan to Value is over 80% – you and I would not qualify for a traditional re-fi. Harp 2 allows us to re-fi.

What you want is not possible. Period. They are not “holding you hostage” with PMI. You don’t have 80% equity in your home.

However, Greentree is a rotten loan company. I’ve had to deal with them through work and they suck eggs. And it’s pretty obvious they have not taken the time to explain the process to you. Don’t blame you for wanting to change.

Go speak with the bank that has your other accounts (checking, savings etc). See what they can do for you.

Being underwater, you’re not going to get rid of PMI. So stop pushing on that. It’s a looser. Just get your re-fi and take advantage of the historically low rates.

You can learn more about Harp here: http://www.makinghomeaffordable.gov/programs/lower-rates/Pages/harp.aspx

Nancy asks…

guidelines for new H4H goverment program?

new guidelins for goverment hope program

John answers:

Under the H4H Program many types of mortgage are eligible for refinancing including, conventional (prime, Alt-A, subprime) for either fixed or adjustable rate mortgages. However, the loan must have originated on or before January 1, 2008 and the borrower must have made at least six payments on the existing mortgage. A borrower may be current or delinquent at the time the new H4H mortgage is originated.

Chris asks…

Help with refinancing.?

I need help with our mortgage. Ok our loan was for 250k it is a 30 yr conv w/ pmi at 7.625. Our payment was 1996.00 a month for the first year but then it went up to 2632.65 because they said that there was an escrow shortage on our part. Anyway we really need to refinance because we can’t continue to pay this much. Well, as far as I am concerned all the new “programs” or what not are for people in foreclosure. We have made every payment so far so we are not there… but we want to prevent that from happening so what can we do? They say that you can’t refinance until you have paid off 5%… considering that almost everything we pay goes straight to interest we have not paid that yet….. WHAT ARE OUR OPTIONS?!??!?!

Please help if you know anything we can do….

John answers:

Refinancing isn’t going to fix your escrow shortage. Since you had the mortgage for only one year, I don’t think you have any options unless you can borrow the escrow shortage from family or other personal liquid accounts.

Your payment jumped over $600 a month because of an escrow shortage? That’s an escrow shortage of over $7,200 in the year. I’m thinking someone at the mortgage company has a major problem with math like adding Principal + Interest + Taxes + Insurance to come up with your monthly payment. I believe escrow is figured on a 14 month year compressed into 12 months. That gives your lender a 2 month cushion to work with when paying insurance and taxes.

$200,000, 30yr fixed @ 7.625 should be a monthly payment of $1415 + taxes and insurance. I’ll presume your conventional mortgage required a 20% down payment, thus financing about $200,000. If you financed the entire $250k, then monthly payment would be about $1770 + taxes & insurance.

Your county assessor may have a web site that you can go to to see what last year’s tax bill was. Something just doesn’t smell right here, but I don’t know where you live. Did they fail to include taxes and insurance in your monthly payment?

Unless your are sure your taxes and insurance are over $10,000 annually, I would demand a full audit of your escrow account.

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