HARP FAQ:

1. What is HARP?
2. How do I know if my loan qualifies for a HARP refinance?
3. Do I have to use my current lender to take advantage of HARP?
4. I am upside down on my mortgage, can I still refinance with HARP?
5. Do I have to pay closing costs?
6. Will I need an appraisal?
7. I have a second mortgage or a Home Equity Line of Credit can I still refinance with HARP?
8. What are the income requirements?
9. I don’t have a Fannie Mae or Freddie Mac loan, can I still refinance under HARP?
10. I have had a bankruptcy or a foreclosure in the past, can I still refinance under HARP?
11. I am making less money now, can I still refinance under HARP?
12. Is there a minimum credit score?
13. Do I have to have reserves or assets?
14. I am self employed and my reported income is low, can I still refinance under HARP?
15. Can I refinance an investment property or second home?
16. I have PMI can I refinance?
17. I was originally told I don’t qualify for HARP what can I do?
18. How long will it take to close?
19. What documents are needed to close?
20. My property is on the market to be sold, can I still refinance?
21. Should I use a broker, lender or bank for my HARP refinance?
22. When does this program end?
23. My loan is a JUMBO loan, what do I do?
24. Can I add or remove a borrower or co borrower from my loan?

1. What is HARP?
1. HARP stands for Home Affordable Refinance Program.  It was designed to assist homeowners in refinancing their current mortgage, even if they owe more than the home’s current value.  The goal is to put responsible borrowers in a better position by: reducing their monthly payments; lowering their interest rate; reducing the amortization period or moving them from a more risky loan such as an Interest-only or ARM to a more stable product like a Fixed-Rate Mortgage
2. How do I know if my loan qualifies for a HARP refinance?
1. There are a few steps you can take to figure out if your loan qualifies:
1. Your loan has to have started before June 1, 2009
2. Your loan must be owned or guaranteed by Fannie Mae or Freddie Mac (To find out if your loan is Owned or Guaranteed by Fannie Mae or Freddie Mac Click HERE)
3. If your loan started before June 1, 2009, but your loan does not appear on Fannie or Freddie’s website call your current lender and ask them “who owns your loan?”  On more than one occasion Fannie or Freddie has misspelled a street name or had a typo in the information, which is easily fixable.
3. Do I have to use my current lender to take advantage of HARP?
1. NO! You do not have to use your current lender to take advantage of this program.  This is a common misconception- We have often found that current lenders or banks have much higher rates and costs for this program than brokers do!  Because of the volume of loans that Mortgage Atlanta does, we offer our clients discounts on HARP loans as well!
4. I am upside down on my mortgage, can I still refinance with HARP?
1. YES! Under the HARP program there is no limit on the LTV – (Loan to Value) on most of the HARP refinances.  That means if your loan amount is, for example, $200,000 and your current value is $150,000you can still qualify!  This is the right program for you!
5. Do I have to pay closing costs?
1. Mortgage Atlanta has many options when it comes to  HARP refinance.  We have many No Closing Cost options, as well as Lower Cost Options, for you to choose from.  When you speak with your loan specialist let them know you would like to explore your options!
6.  Will I need an appraisal?
1. For most borrowers the answer is NO.  Both Fannie Mae and Freddie Mac have set up computer models in their underwriting system that will tell your Mortgage Atlanta HARP specialist if you need an appraisal.  If you are refinancing into a Fixed Rate Mortgage most people will not need an appraisal.
7. I have a Second Mortgage or a Home Equity Line of Credit (HELOC) can I still refinance with HARP?
1. YES- when you are speaking with your HARP specialist make sure to tell them you have a 2nd mortgage or HELOC up front.  When you have a mortgage in second position you have to get permission from the second mortgage holder to refinance the first.  This is called Subordination.   This is usually a simple process but every second mortgage lender has a different process.  Your loan specialist will help coordinate your subordination for your refinance.
8. What are the income requirements?
1. For many borrowers, who are lowering their payments, the lender will not require documentation of income.  Some lenders may have overlays or ask for some verification of income.  All lenders will do a verbal verification of employment before closing.  If your payment is increasing by more than 20% a full income underwriting will be performed.
9. I don’t have a Fannie Mae or Freddie Mac loan can I still refinance under HARP?
1. If you looked online and your loan is not owned by Fannie Mae of Freddie Mac call one of our loan specialists at Mortgage Atlanta and we will walk you through the steps to see if you qualify!
10. I have had a bankruptcy or a foreclosure in the past, can I still refinance under HARP?
1. YES!  HARP 2.0 allows you to refinance your property if you have had some credit problems in the past.  Even if you had a Bankruptcy or Foreclosure in the past 12 months you can still refinance under this program.
11. I am making less money now, can I still refinance under HARP?
1. YES!  Most borrowers will have limited income documentation requirements.  Unless your payment is going up by more than 20% you will most likely not have to document your income.
12. Is there a minimum credit score?
1. For the most part the answer is no, there is not a minimum credit score for  HARP 2.0 refinance.  Many lenders will be putting their own restrictions on this, so it’s best to check with one of Mortgage Atlanta’s HARP experts to make sure you qualify!
13. Do I have to have reserves or assets?
1. The general answer is NO.  Each HARP refinance is run though a computer system.  The system will indicate if you are required to have any reserves in order to refinance.   In general HARP waives most reserve requirements.
14. I am self employed and my reported income is low, can I still refinance under HARP?
1. With Mortgage Atlanta you should still be able to refinance under HARP 2.0.  We are able to get income waivers for most of our self employed borrowers.  It is always best to go over this with one of our HARP Specialists to see if you can get an income waiver.
15. Can I refinance an investment property or second home?
1. YES! HARP 2.0 allows you to refinance any type of occupancy property.  As long as your loan is owned by Fannie or Freddie, Mortgage Atlanta allows you to take advantage of this program.
16. I have PMI can I refinance?
1. YES you can!  The mortgage insurance companies have all come up with plans to work with Mortgage Atlanta to help you refinance your home loan at a lower rate!  In the past there have been a number of obstacles that prevented this, but under the new program most are eliminated!
17. I was originally told I don’t qualify what can I do?
1. You should call one of Mortgage Atlanta’s  HARP specialists and go over your unique loan scenario.  Often times other lenders over look things and we pay special attention to your needs and do everything we can to get your loan refinanced.
18. How long will it take to close?
1. We are already starting to have an increase in refinance volume, because of HARP 2.0.  Some lenders turnaround times are 7-10 days, while others are much longer.  Your HARP specialist will guide you to the right lender to meet your individual refinance goals and lay out a timeline that is reasonable.
19. What documents are needed to close?
1. Each loan is different.  Some borrowers will be eligible for income waivers and others may have to show their last 2 years tax returns.  One item you should try and look for is the NOTE you received, when you originally took out your loan.  Most lenders will need this to verify you qualify for the loan.
20. My property is on the market to be sold can I still refinance?
1. Most lenders will allow you to refinance under HARP 2.0 if your house is on the market.  Be sure to let your loan officer know up front, so they can make sure to use a lender that will not penalize you for having the house on the market.
21. Should I use a Broker, Lender or Bank for my HARP refinance?
1. Mortgage Atlanta recommends talking with one of our HARP specialist to determine what the best course of action is to save you the most amount of money.  Mortgage Atlanta is a broker in the state of Georgia.  As a broker, we have a duty to offer the best rates and closing costs to our clients. We want you to be so happy with our service that you can’t wait to refer your friends and family to Mortgage Atlanta.
22. When does the HARP program end?
1. HARP 2.0 officially ends April 2014.  Rates are at historic levels why pass that up? Call us today to start the process!
23. My loan is a JUMBO loan what do I do?
1. There are many refinance options for JUMBO loans.  In some cases you may qualify for the HARP refinance.  You should call Mortgage Atlanta today and find out which programs you are eligible for.
24. Can I add or remove a Borrower or Co Borrower from my loan?
1. It is possible to add or remove someone from the loan.  The process to do that can be a little delicate.  You can remove a borrower from the loan only under certain circumstances.  To best determine if you meet these requirements talk with one of our loan officers today!

Late last year the government along with Fannie Mae and
Freddie Mac announced plans for a new version of their HARP program.  HARP has been around for a few years and allowed home owners with Fannie Mae or Freddie Mac loans to refinance with expanded guidelines.  The new version, or HARP 2.0, eliminates most of the bottlenecks home owners were having with version one.

Here are some of the highlights to this program:

• No limit on Loan to Value
• Most loans will not need an appraisal
• Even if you have a second mortgage we can still
  refinance the first
• If you currently have PMI or MIP we can refinance
  your loan
• Limited income documentation
• Limited credit requirements
• Even if you have been turned down in the past
  Mortgage Atlanta may be able to help you lower your payment under this new
  program.
• You can change lenders and save even more
  sometimes!

Mortgage Atlanta has teamed up with a number of lenders to
offer the HARP program at the best rates and lowest closing costs around.  If you want to find out how you can qualify
for this loan call us at 678-564-1522.

When applying for a home loan one of the first things to contemplate is your down payment.  You should spend some time discussing the different down payment requirements with one of Mortgage Atlanta’s loan specialist.  Depending on the type of loan you are applying for the requirements will be different.  Some loans allow your entire down payment to be in the form of a gift while others do not.  Take a look at our guide below for some of the common rules and guidelines.  As always please feel free to contact any Mortgage Atlanta loan specialist to go over these guides

FHA LOANS

• Minimum down payment 3.5%
• Any or all of the down payment may be given in the form of a gift
• FHA Gift Rules
• The gift can cover down payment and closing costs
• May come from a family member, employer, labor union, close friend, charitable institution, or a governmental agency.
• A gift letter is required stating the relationship between the parties and that there is no repayment required for the gift. (get this letter from your lender)
• All funds and transfer of funds must be documented (discuss any transfers or checks with your loan officer before making the transfer of deposit)
• Currently Seller funded down payments are not allowed.
• The borrower must show the underwriter proof that they have sufficient funds in their account prior to closing. It is a good idea to have your down payment in your account 60 days before closing. 
• If you are making any deposits into your accounts 60 days prior to closing always make a copy, front and back of the check and speak with your loan officer before making the deposit.  Some deposits may hinder the loan process.
• Regardless of down payment percent, FHA loans always require upfront and monthly mortgage insurance premiums; however, the percentage of down payment may lower the mortgage insurance amounts.

CONVENTIONAL LOANS:

• The minimum down payment on most conventional loans is 5%; however, there are programs with as little as 3% down. 
• The lender will usually require the borrower to pay a monthly mortgage insurance premium if the down payment is less than 20% of the purchase price
• The following guides apply for most conventional loans:
• Gift funds are allowed from valid sources; however, if the gift is less than 20% of the purchase price the borrower will be required to contribute a minimum of 5% of their own funds in the transaction and these funds must sourced and seasoned. (speak with your loan officer at Mortgage Atlanta to discuss this)
• Any large deposits must be verified and be from a valid source.  Always check with your loan officer before making any deposits over $250 in your account if they are not direct deposits from your employer.  Make copies of the check as well.

SPECIAL LOANS:

• Georgia Dream Loans
  
  
• Mortgage Atlanta is one of the only Mortgage Brokers in GA to be approved to do Georgia Dream Loans.
• Georgia Dream Loans offer down payment assistance starting at $5000 to first time home buyers in Georgia. 
• Some Community HEROS like Police, Fire, Nurses and Teachers may get as much as $7,500 in down payment assistance though Georgia Dream
• There are a number of factors that go into determining if you qualify for a Georgia Dream loan, so call Mortgage Atlanta to find out if you quality!
• HomePath Loans
• Mortgage Atlanta and Fannie Mae have partnered up to offer great deals in HomePath homes. 
• HomePath homes are owned by Fannie Mae
• Many Fannie Mae-owned properties qualify for HomePath financing which offers great buyer benefits – low down payments, flexible mortgage terms, no mortgage insurance and much more!
• To find a home home eligible for HomePath click here

Notes about down payment:

Your percentage of down payment may affect how much the seller can contribute towards closing costs.

• You should always discuss down payment options with your loan officer.  Let them know if you are trying to decide between different loan amounts.  Have your mortgage specialist run the payments at different down payment percentages for you.
• If you think you may have to change the amount of down payment let the loan officer know right away. It may delay your closing if there is a last minute change that affects your APR.
• Check with your lender and closing law firm to find out if the law firm requires funds in the form of a wire or will they accept a cashier’s check.
• If you are going to wire funds try and do it 24 hours in advance.

Please contact Brian Berman founder of Mortgage Atlanta, LLC to answer any of your down payment questions. 678-564-1522 or bberman@mortgage-atlanta.com

Mortgage Atlanta, LLC 1770 The Exchange SE, Suite 280, Atlanta, GA  30339
Georgia Residential Mortgage Licensee 24081; NMLS Company License # 184273

HARP or Streamline Refinance was created under the “Making Home Affordable” program administered by Fannie Mae and Freddie Mac.  Making Home Affordable offers strong options for homeowners to refinance into lower rate mortgages.

The number one objection to refinancing right now is people don’t think they can qualify for a lower payment.  HARP allows borrowers who are current on their loan to do a streamline refinance with minimal qualifications. 

Prior to HARP many borrowers had applied for loans and were turned down for various reasons.  HARP has fixed this problem and saved hundreds of thousands of people millions of dollars though refinancing.
Some of the features of HARP are:

• You can refinance a first mortgage up to 125% of the appraised value
• You may not be required to have an appraisal
• Higher debt to income ratios
• If you current loan does not have mortgage insurance, your new loan will not have mortgage insurance either.
• Less documentation
• No limit on second mortgages (Combined loan to value)
• You do not have to go back to your current lender – you can shop for the best rates!

At Mortgage Atlanta, we pride ourselves on educating our clients on all of the best options to get the lowest possible rate.  For a home owner whose value has dropped a HARP refinance is often their best option.
Mortgage Atlanta offers a number of different types of mortgages under the HARP program; here are some examples:

• Lower your interest rate /  payment
• Convert from an ARM (adjustable rate mortgage) to a FIXED Rate Loan.
• Convert from a 30 Year Loan to a 20, 15 or 10 year loan and save!
• You can even refinance into an ARM for the lowest possible rates.
• No Closing Costs loans
• Low Closing Costs Loans

The first step in finding out if a HARP streamline refinance is right for you is to pick up the phone and call us today at  678-564-1522.

For HARP FAQ: Frequently Asked Questions CLICK HERE

Federal Housing Administration (FHA) loans are a great way for people to buy or refinance a home.  The FHA is a division of the US Department of Housing and Urban Development (HUD) The FHA was created in 1934.  The mission of FHA is to promote home ownership.  FHA insures our loans so Mortgage Atlanta can offer you a better deal! 

There are 4 types of FHA loans: Purchase, Refinance, Cash Out, and Streamline. 

PURCHASE:

FHA Purchase loans allow a buyer to purchase a home with a minimum down payment of 3.5% of the purchase price.  Some borrowers may also qualify for down payment assistance programs as well.  For more information on down payment assistance please call your Mortgage Atlanta Loan officers today!  

Benefits to FHA Purchase Loan:

• Lower down payment with good interest rates
• FHA accepts lower credit scores
• Down payment can come from a gift
• FHA allows for co-signers
• Seller is able to pay up to 6% of the purchase price in closing costs
• FHA may allow for slightly higher debt to income ratios than other loans.

REFINANCE:

FHA Refinance loans allow people who currently are not in an FHA loan to refinance into a FHA loan.  This may be beneficial to someone who has a toxic sub-prime mortgage or an adjustable rate loan.  They are able to use FHA loans to refinance that mortgage into a safe mortgage product. 

Benefits to FHA Refinance Loan:

• Refinance higher rate loans to lower payment
• Can combine 1st and 2nd mortgage into one loan
• May go up to 97.75% Loan to Appraised Value.
• Roll closing costs into the loan
• Lower credit score requirements than conventional loan

CASH OUT:

FHA Cash Out refinances allow homeowners to tap into the equity of their home in order to pull cash out.  For example, if a home is valued at $200,000 and the home owner owes $100,000 in mortgage debt on the house, the owner may be able to $70,000 cash out of the house in cash.  This is a great way to fund a remodeling project or to pay off other high interest, or non-tax-deductable debts!

Benefits to FHA Cash Out Loan

• Can access up 85% of the appraised value of the home’s equity
• Higher loan to values than conventional loans.
• Lower credit requirements than conventional loans.
• Pay off high interest debt
• Use cash for home improvement

STEAMLINE REFINANCE:

FHA Streamline Refinance is for borrowers who are currently in FHA loans that would like to change loan products or lower their interest rates.  If a borrower wants to convert from a 30 year fixed interest rate loan to a 15 year fixed rate loan or from an adjustable rate loan to a fixed rate loan a Streamline Refinance may be used.

Benefits to FHA Streamline:

• May not need an appraisal
• May not need to verify income or assets
• Very simple transaction can save a tremendous amount of money

*** Sometimes the closing costs can be rolled into the loan and other times they cannot.

FHA LOAN FEATURES:

• UFMIP
•  All FHA loans have Up Front Mortgage Insurance Premium amount of 1% of the loan amount.
• UFMIP can be financed and rolled into the base loan amount. For example, if you are borrowing $150,000 your base loan amount would be $150,000, your UFMIP would be $1.500.  You final loan amount would be $151,500.
• MIP
• MIP is FHA’s monthly mortgage insurance premium.
• Depending on the type of loan and your down payment amount the amount of MIP will vary. For typical 30 year fixed home purchase with 3.5% down the MIP will be 1.15% of the loan amount divided by 12.
• For example:  we will use the same loan amount of $150,000. 
• The final loan amount with the upfront MIP is $151,500
• Monthly MIP is 1.15% or .0115
• Yearly MIP= 151,500 x 0.0115 = $1742.25
• Monthly MIP = $1742.25 / 12 = $145.19  
• In some cases if you pay off or refinance your loan you may be entitled to a portion of the UFMIP back.  You may also be able to request your MIP be removed if you have paid your loan down to 78% loan to value and it has been at least 5 years.
• Most lenders have a minimum credit of 620-640 and a max debt to income ratio of 55%.

At Mortgage Atlanta we have a number of lenders that offer the best rates on FHA loans in GA.  We have also teamed up with the Department of Community Affairs to offer Down Payment Assistance for qualified borrowers.  So give us a call today to find out if FHA loans are the right option for you.

Home Affordable Refinance Program (HARP)

1. I’m current on my mortgage Will a refinance under the Home Affordable Refinance Program (HARP) help me?      
2. How do I know if I am eligible for a refinance under HARP?
3. Will refinancing lower my payments? How might HARP benefit me?
4. Will a refinance under HARP reduce the amount that I owe on my loan?
5. How will I know if a refinance under HARP will improve the long-term affordability or stability of my loan?   
6. How do I know if my loan is owned or has been guaranteed by Fannie Mae or Freddie Mac?
7. I owe more than my property is worth. Do I still qualify for a refinance under HARP?
8. I have both a first lien and a second lien mortgage Do I still qualify for a refinance under HARP?
9. What are the interest rate and other terms of a refinance under HARP?
10. Can I get cash out of a HARP refinance to pay other debts?
11. How do I apply for a refinance under HARP?
12. I am delinquent on my mortgage Will I qualify for a refinance under HARP?
13. Will I need mortgage insurance on a HARP refinance?
14. How long will refinances under HARP be available?

1. I’m current on my mortgage. Will a refinance under the Home Affordable Refinance Program (HARP) help me?
   YES- Eligible homeowners who are current on their mortgages but have been unable to take advantage of today’s lower interest rates because their homes have decreased in value, may now have the opportunity to refinance. Through a refinance under HARP, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they own or that they guaranteed in mortgage backed securities.

2. How do I know if I am eligible for a refinance under HARP?
   You may be eligible if:
   • You are the owner-occupant of a one- to four-unit home.
   • The loan on your property is owned or guaranteed by Fannie Mae or Freddie Mac (See “How do I know if my loan is owned or has been guaranteed by Fannie Mae or Freddie Mac?").
   • At the time you apply, you are current on your mortgage payments ("Current" generally means that you have not been more than 30 days late on your mortgage payment in the last 12 months; or, if you have had the loan for less than 12 months, you have never missed a payment).
   • The amount you owe on your first lien mortgage does not exceed 125% of the current market value of your property.
   • You have a reasonable ability to pay the new mortgage payments.
   • The refinance improves the long term affordability or stability of your loan. (See “Will refinancing lower my payments? How might HARP benefit me?”)
3. Will refinancing lower my payments? How might HARP benefit me?
   The objective of a refinance under HARP is to provide creditworthy homeowners who have shown a commitment to paying their mortgage the opportunity to get into a new mortgage with better terms.

   Homeowners whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments. Homeowners who are paying interest only, who have a low introductory rate that will increase in the future, or who face a balloon payment may not see their current payment go down if they refinance to a fixed rate and payment. These homeowners, however, could save a great deal of money by reducing the amount of interest you pay over the life of the loan.

   Refinancing into a more stable fixed-rate loan product and avoiding future mortgage payment increases would likely improve your ability to sustain your mortgage payments over the long-term. When you submit a loan application, your lender will give you a "Good Faith Estimate" and a "Truth in Lending Statement" that includes your new interest rate, mortgage payment, and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you.

4. Will a refinance under HARP reduce the amount that I owe on my loan?
   No. The objective of a refinance under HARP is to help homeowners get into more stable or more affordable loans. Refinancing will not reduce the principal amount you owe to the first lien mortgage holder or any other debt you owe. (See “How will I know if a refinance under HARP will improve the long-term affordability or stability of my loan?”)

5. How will I know if a refinance under HARP will improve the long-term affordability or stability of my loan?
   When you submit a loan application, your lender will give you a "Good Faith Estimate" and a "Truth in Lending Statement"that includes your new interest rate, mortgage payment, and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you.

6. How do I know if my loan is owned or has been guaranteed by Fannie Mae or Freddie Mac?
   Ask your mortgage lender or servicer. Also, both Fannie Mae and Freddie Mac have established toll-free telephone numbers and web submission processes to make this data available. Homeowners can enter information to determine if either agency owns or guaranteed the loan. This information is not a guarantee of eligibility for a refinance under HARP, as other qualifying criteria must also be met.
   For Fannie Mae:
   1-800-7FANNIE (8am to 8pm EST)
   www.FannieMae.com/loanlookup
   For Freddie Mac:
   1-800-FREDDIE (8am to 8pm EST)
   www.FreddieMac.com/mymortgage

7. I owe more than my property is worth. Do I still qualify for a refinance under HARP?
   Eligible loans will include those where the first lien mortgage does not exceed 125% of the current market value of the property. For example, if your property is worth $200,000 but you owe $250,000 or less on your first lien mortgage you may qualify. The current market value of your property will be determined after you apply to refinance.

8. I have both a first lien and a second lien mortgage. Do I still qualify for a refinance under HARP?
   As long as the amount due on the first lien mortgage is less than 125% of the value of the property, homeowners with more than one mortgage may be eligible for a refinance under HARP. Your eligibility will depend, in part, on two additional requirements:
   • The lender that has your junior lien mortgage must agree to remain in a junior lien position.
   • You must be able to demonstrate your ability to meet the new payment terms on the first lien mortgage.
9. What are the interest rate and other terms of a refinance under HARP?
   The rate will be based on market rates Your Mortgage Atlanta loan officer will help walk you though choosing the best interest rate to maximize your savings.

10. Can I get cash out of a HARP refinance to pay other debts?
    No. The Home Affordable Refinance will not return cash to the borrower for the purpose of paying other debts.

11. How do I apply for a refinance under HARP?
    Call Mortgage Atlanta at 678-564-1522, and ask for a Home Affordable Refinance application. In the meantime, it will help your loan offier and speed up the application process if you gather some information and documents before you call. Generally, you will need the following:
    • Information about the monthly gross (before tax) income of all the homeowners on your loan, including recent pay stubs if you receive them, or documentation of income you receive from other sources
    • Your most recent income tax return
    • Information about any junior lien mortgage on the house
    • Account balances and minimum monthly payments due on all of your credit cards
    • Account balances and monthly payments on all your other debts such as student loans and car loans
12. I am delinquent on my mortgage. Will I qualify for a refinance under HARP?
    No. Homeowners who are currently delinquent or have been more than 30 days overdue during the past 12 months generally will not qualify. Contact your servicer to see if a modification under the Home Affordable Modification Program is an option for you.

13. Will I need mortgage insurance on a HARP refinance?
    If your existing loan has private mortgage insurance, you will need the same amount of insurance coverage for a refinance under HARP. If your existing loan does not have private mortgage insurance, it will not be required as part of a refinance under HARP.

14. How long will refinances under HARP be available?
    The program expires on June 10, 2011. Your refinance under HARP must have a mortgage note date on or before that date.

A client recently told me that they didn’t feel that now was the right time to buy because they were worried about housing prices.  They had just sold their house and were thinking about renting for the next year.  They had walked away from their sale with about $25,000 in cash.  I didn’t understand why they would want to rent.

The problem with buying a home is that it can often be an emotional process, and when emotions are involved buyers tend to focus on the wrong things.  For example, a friend of mine who is a financial advisor told me that while his main job is to manage his client’s money his second job is to remove the emotion out of investing.  That is just what a good mortgage consultant will do for you.  They will help you remove the emotions out of making a financial decision and show you the correct path.

These particular clients were worried that if they bought a new home they may lose some equity if home values continued to drop.  My goal was to show them what could happen if they waited 1 year.  Here is what we came up with:

The home they were looking to buy was $250,000.  They were going to make a $25,000 down payment and get a 30 year fixed mortgage at 4.25%.  The monthly payment on the loan would be $1,106 and $13,272 yearly. (Click here for Mortgage Calculators)

The problem was they were focusing on the wrong number in the transaction, the price of the house.   They have two children who were just entering middle school and high school.  They would probably stay in their next house for 6 to 7 years until both kids graduated high school.

Having all of this information my goal was to find out if waiting our buying was the right option.  We had to make a few assumptions on what the market would look like 12 months from now.  Interest rates just hit their lowest level in the last 70 years and a buyer with excellent credit could get a rate around 4.25%.  Most experts would agree that in the next 12 months rates are going to go up.  No one really knows exactly where rates will be but for this example let’s say they 1% higher or at 5.25%.  Let’s also assume that home values went down at about 3% over the 12 months. 

Using the above assumptions would make the home that was $250,000 now worth $242,500.  With the same down payment of $25,000 and the new rate of 5.25% their monthly payment would be $1201 and $14,412 yearly. (Click here for Mortgage Calculators)

Clearly the new payment is $95 a month more and will cost them $1140 more per year.  This was shocking news for the buyers.  They thought that if they waited and bought the house at the lower price, even with a higher rate they would be saving money.  But the real shocker came when we looked at how much they would have spent on rent.  They were going to pay $1250 a month on rent for 12 months.  So not only would they have spent $15,000 that year on rent they would have nothing to show for it. 

The moral of the story is make sure that you are working with honest, and knowledgeable realtors and mortgage professionals that can help take the emotions out of the financial decisions making process.  Now we are not telling you that buying a home should not be an emotional one, but when it comes to financing leave your feelings behind!

By Kenneth R. Harney
Saturday, May 15, 2010; E01

If you’re thinking about applying for a home mortgage, here’s some important news: Beginning June 1, your lender is likely to order a second full credit screening immediately before closing.

The last-minute credit report will be designed to find out whether you have obtained — or even shopped for — new debt between the date of your loan application and the closing. If you’ve made applications for credit of any type — for furnishings and appliances for the new house, a car, landscaping, a home equity line, a new credit card, you name it — the closing could be put on hold pending additional research by the lender.

If you’ve actually taken out new loans that are sizable enough to affect the debt-to-income ratio calculations used in your original mortgage approval, the whole deal could fall through. The added debt load could render you ineligible for the mortgage because you suddenly appear unable to handle the payments without a strain on your household budget.

The June 1 changes are part of a new effort by mortgage giant Fannie Mae to cut down on slipshod underwriting by lenders and fraud by borrowers. Fannie’s "loan quality initiative" will require lenders not only to pull two credit reports for each mortgage transaction but to perform additional verifications of borrower occupancy plans for the property, Social Security numbers and Individual Taxpayer Identification Numbers.

"There’s an almost irresistible urge" for many mortgage borrowers, said Don Unger, chief executive of Advantage Credit of Evergreen, Colo. "The lender says, ‘Okay, you’re approved for the loan,’ and you immediately think about shopping for all the things you need for the house. You go to Home Depot" or other major retailers, "and you put in an application."

In the past, that might not have raised an eyebrow — or even been detected. But under the new double-check policy, when the Home Depot application shows up as a "hard," or borrower-initiated, inquiry on a credit report, Unger said, the lender "is going to have to contact" the merchant and determine whether credit was extended, in what amount, and how this might affect the applicant’s home financing transaction.

Marc Savitt, president of the National Association of Independent Housing Professionals and a mortgage broker in Martinsburg, W.Va., said it’s not an uncommon scenario. "Most often the new debt involves furniture or other goods for the house," Savitt said. "However, we have seen debt for new cars and other major purchases."

Terry Clemans, executive director of the National Credit Reporting Association, recalls one case in which the home buyers "went out and gorged on $40,000 worth of new furniture and all types of stuff" after their loan approval — incurring monthly payments far beyond what they could possibly afford. Under the new policy, they would likely be shot down before closing.

Fannie Mae spokeswoman Janis Smith said lenders "will have to look for things like new credit accounts, increased credit lines, increased balances on existing accounts, undisclosed or newly recorded liens, second mortgages — anything that may have changed since initial application that might impact a borrower’s debt-to-income ratio."

As a practical matter, some lenders are likely to ask their credit reporting vendors to perform the actual investigations when new debts or inquiries pop up on borrowers’ files. Fannie Mae’s instructions say that "lenders must determine that all debts of the borrower incurred or closed up to and concurrent with the closing" are considered in the final loan analysis.

Unger, however, said all this may not be as straightforward as it sounds. For example, if the credit report is pulled immediately before closing to comply with the "up to and concurrent" requirement, there may not be sufficient time to check out inquiries — especially those in which no actual drawdown of debt has been reported to the national credit bureaus. He also questioned whether entire loan packages might need to be re-underwritten — a time-consuming process — based on credit data discovered at the eleventh hour.

In that event, poof goes your closing.

How should home buyers and refinancers prepare for the new credit check procedures? Lenders and credit reporting company executives say everybody needs to follow just one basic rule: abstinence. Between your application for a mortgage and the date of closing — which might be a span of 45 to 60 days or more — resist the irresistible.

Don’t apply for new credit unless you discuss it in advance with your lender and get a green light.

When buying or refinancing a home with Mortgage Atlanta we estimate your ability to pay back your home loan based on your credit score. All lenders base your interest rate on the amount of risk your credit portfolio shows. Therefore, a low credit score can results in a higher interest rate, higher monthly payments and higher closing costs!

A underwriter looks at a borrower who has a credit score of 620 as a much higher risk than someone who has a 740 credit score. Mortgage Atlanta may still agree to provide a mortgage to the borrower with the 620 credit score; however, there may be a slightly higher interest rate because of the credit score.

A borrower who increases his or her credit score from 620 to 720+ can potentially save $289 per month on mortgage payments, $3,468 per year, and approximately $104,323 over the life of the 30-year loan. This is on a loan amount of $250,000. The higher the loan amount the greater the savings!

SOURCE: Credit Resource Corp., How Much Does a Low Score Cost You? http://www.creditresourcecorp.com

Loan Level Price Adjustment Fees (LLPAs)

In March 2008 Fannie Mae and Freddie Mac implemented Loan Level Price Adjustments.  These adjustments can affect your rate or your closing costs.  All conventional (and as of 2010 Government) loans are subject to these adjustments.  Your Mortgage Atlanta Loan Specialist can help price your interest rates and closing costs!  See the following chart to see where your scores fall:

So on a 80% LTV $250,000 loan amount, carrying a middle credit score of less than 620 could cost you an extra $7,500 upfront or a higher interest rate!!