It has been over several month since the new and improved Home Affordable Refinance Program version 2.0(HARP 2.0 …for short), has been in place. HARP 2.0  is designed to assist homeowners in refinancing their mortgages – even if they owe more than the home’s current value.The primary expectation for Home Affordable Refinance is that refinancing will put responsible borrowers in a better position by reducing their monthly principal and interest payments, reducing their interest rate, reducing the amortization period, or moving them from a more risky loan structure (such as an interest-only mortgage or a short-term ARM) to a more stable product (such as a fixed-rate mortgage). Here are the 10 most important facts that you need to know about this program.

1. HARP 2.0  is not an FHA Streamline. HARP mortgage program is administered through Fannie Mae and Freddie Mac. FHA Streamline Refinances are performed through the FHA. However , the programs have similarities.
2. Your Loan my be own by Fannie Mae or Freddie Mac. In order to find out who own your current loan, you can contact your current lender or you can go to the following links: Fannie Mae http://www.fanniemae.com/loanlookup    or http://www.freddiemac.com/mymortgage.
3. Your current loan must have been delivered to Fannie Mae prior to 06/01/09.If not, your loan remain ineligible for HARP.
4. You can only use the HARP mortgage program one time per home. If you used HARP 1, you cannot use HARP 2.0.
5. Your HARP 2.0 refinance can be done by any lender. You have the choice to pick and shop around for a lender
6. The property can  be your principal residence, second/vacation or investment property. Now, if the lender denies you for a HARP program due to the occupancy status of the your property, go to another lender.
7. You must be current on your mortgage. You must have not been delinquent in the most recent 6-month period, or had more than one 30-day delinquency in months 7 through 12.
8. You can not cash-out with a HARP loan. The HARP mortgage program doesn’t allow cash out refinance. Only rate-and-term refinances are allowable.
9. You can have equity or  You can be underwater on your mortgage. The HARP 2.0 program makes it possible to refinance your current loan into a lower payment regardless of present Loan-to-value. Now, different banks are using different variations of the HARP 2.0 program. The edits are subtle, but they’re enough to cause some people to get denied who should otherwise have been approved. If you’ve been turned down for HARP 2.0, just try with a different bank.
10. You don’t have to have a financial hardship to qualify. Unlike the  Home Affordable Modification program (HAMP) which is intended for borrowers who do not have the ability to make their mortgage payments, even with a refinance and document a financial hardship, the HARP 2.0 program can help you  qualify for a lower interest rate or better terms.

Now, the Home Affordable Refinance Program will not stop a foreclosure . If you find yourself at risk of a foreclosure contact your lender right away to explore your options.

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When you become a homeowner, one of the things you learned very quickly is to try to get the lowest interest rate possible in your loan. So as a savvy homeowner,  you took advantage of low interest rates to refinance  or to buy your home— and then rates went even lower. Should you refinance ? It’s easy to figure out if it’s worth it if you follow the next steps

1. Contact Your Trusted Loan Consultant  or Lender:  Just like we have the  family doctor or lawyer, you should have a loan consultant or lender that you trust and like . Ask your current loan consultant or lender to give you an  itemized list of all fees and cost for the loan. Sometimes, your current consultant : to keep your business; it may offer you a deal others won”t match.
2. Look beyound at the rate being offered: If after talking to your current lender, you decide to shop around;, make sure you are comparing apples with apples. For example, let say, you call another lender- lender X . Lender X tells you that you will get this amazing rate and sound really good deal!! Make sure that what Lender X is offering is the type of loan that you want. Get a written good faith estimate before taking an offer that looks to good to be true. Compare it to your current lenders estimate and make sure it is the same type of program.
3. Be Specific:  Lenders are in the business of making loan, not saying you money. It is their job to get your business. If you ask” I want the  lowes fixed rate you or lowest payment !”.  Most likely, you will get that, but it might not be the loan that you had in mind. Within  loan programs, you can find 30, 20, 15 , 5, and 1 year fixed loans(just to name a few!). Be very specific with the terms of the loan that you want!! If plan to be in your house for more than 10 years, then you want the lowest payment in a 30 year fixed.  Ask for it and don’t be sucker into taking a loan that will force you to refinance later on and you will have to pay COSTS  AGAIN !!!!!!
4. Check the Numbers:  Let say that to refinance, it will cost you $2,o00 dollars, and doing so will lower your monthly payment by $50, it will take you three years to break even.  After three years, you begin to save. In the meantime, you are just getting back the money you paid to refinance. If you plan to stay in the house for more than 3 years, then  it’s worthwhile. But if you plan to sell within three years, then refinancing is not a good choice.
5. Beware of No Cost Loans :You’re comparing loans; One loan requires thousands in closing costs; the other doesn’t cost a dime. Which is the better deal? The answer depends on the total costs of the loan, not just the closing costs (which are the costs involved in obtaining the loan). Loans that waive closing costs often force you to pay a higher interest rate. So when evaluating loans, you need to determine which program offers you the lowest cost over the life of the loan, not merely the lowest cost for obtaining

As you can see, refinancing depends on how much it costs, how much it saves and how long you plan on living in the house. If you have a loan consultant or lender that you trust and like, refinancing will be no problem. Your consultant should be able to give an honest understanding of your options. A competent loan consultant will help you refinance ONLY if it makes financial sense to you. Your lender or loan consultant should be able to give you a refinance analysis, so you know if  is worth it or not

Now,  If  your  loan Consultant or lender is not  willing to  give you the necessary knowledge so you can make a wise decision; then it is time to get a new lender or loan consultant that will give you world class service. After All, you deserve it!

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         In 1999, I decided to enter the world of mortgages.  At the time, I was a store manager for GNC( General Nutrition Store) and I wanted to spend more time with my 10 month old son.  With a calculator in hand, no formal training  and a note pad, I was told to go and generate business. 

         Now with the transformation that the mortgage industry has gone through, I’m often asked, “How are you making it?”,and  to that, I always reply “I’m making it because I consult, negotiate and over-see all details of my clients loan transactions and I’m a good  mortgage consultant !” What is a good Mortgage Consultant, you ask?

A Good Mortgage Consultant:

• Will ask you thought provoking questions because no 2 clients are alike. For example, if  you are buying your first home, and you plan to be there for 5-10 years, it might not be a good idea to buy discount points to lower the interest rate due to Cost vs Return.
• Will not quote you an interest rate before pulling your credit, getting your income and asset information and discussing the different loan programs with you. It is impossible to know the interest rate without knowing all about your individual situation.
• Will be able to tell you what all the closing costs mean (not just the dollar amount of the fees, but what the fees actually mean).
• Will be able to explain all of the disclosures to you in plain English.
• Will not charge you an application fee.
• Will only charge you for a credit report if necessary and give you  a copy of YOUR COMPLETE CREDIT REPORT which will show all trade-lines with ficos scores.
• Will not charge charge you any other fee until the closing (except for the appraisal fee, which must be paid before the appraisal can be ordered). 
• Will personally attend your closing.
• Will be licensed by the state of California, www.dre.gov and registered through the Nationwide Mortgage Licensing SystemRegistry http://mortgage.nationwidelicensingsystem.org/Pages/default.aspx
• Will have access to Fannie Mae, Freddie Mac, FHA, VA and all the down payment assistance programs in your local area.
• Will use the online underwriting systems that each of these companies and agencies have available.
• Will not ask you for a fee to help repair your credit but guide you through all possible procedures for credit repair.

A good mortgage consultant, will be there for the long run and ultimately, he or she will  become a  friend……

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Okay, Interest rates have gone up so say hello to 5% loans. 

According to a recent article posted on cnn.com, the national average interest for a 30-year, fixed-rate mortgage surpassed 5% for the first time since May 2010, according to Freddie Mac’s Primary Mortgage Market Survey.

During the week ending Feb. 11, rates averaged 5.05%. That factors in an average of 0.8 points in fees that the average borrower paid to lower his or her rate.

And rates quoted by Bankrate.com — which look at loans not backed by mortgage giants Fannie Mae or Freddie Mac — spiked to nearly 5.25% in the past week. (This index has been popping under and over 5% since early December

During the week ending Feb. 11, rates averaged 5.05%. That factors in an average of 0.8 points in fees that the average borrower paid to lower his or her rate.

And rates quoted by Bankrate.com — which look at loans not backed by mortgage giants Fannie Mae or Freddie Mac — spiked to nearly 5.25% in the past week. (This index has been popping under and over 5% since early December

During the week ending Feb. 11, rates averaged 5.05%. That factors in an average of 0.8 points in fees that the average borrower paid to lower his or her rate.

And rates quoted by Bankrate.com — which look at loans not backed by mortgage giants Fannie Mae or Freddie Mac — spiked to nearly 5.25% in the past week. (This index has been popping under and over 5% since early December

That’s a pretty appreciable increase and the pressure is upward at the moment,” said Keith Gumbinger of HSH Associates, whose own barometer of mortgage rates has been rising quickly as well.

These rising rates will most impact those trying to refinance, rather than those trying to buy. Homebuyers tend to focus on other aspects of the purchase, according to Gumbinger, like whether they like the home and, especially, home prices. “The interest rate is not the key issue for buyers,” he said. “Increases do not produce a huge deterrent.”

For one thing, prices tend to decline a bit in response to higher rates, which offsets some of the increase. For another, most buyers could absorb the additional $29 per month that the recent interest rate jump would produce.

The rising rates can give a temporary boost to home sales because waffling buyers to get off the fence thinking it may cost them more to delay. This week’s rate bump comes in a time of uncertainty surrounding the future of mortgage lending. Washington is mulling over the future of two government-backed mortgage giants. The two companies, plus the FHA, support the vast bulk of all mortgage lending

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We currently seeing amazing mortgage interest rates and those who can refinance, often ask , “What is better a 30 year mortgage or a 15 year mortgage?”. Now, the answer shall always consider your needs and goals, but a 30 -year mortgage brings more benefits rather than a a 15-year mortgage.  A recent article by the financial advisor, Ric Edelman,  gives a simple and clear explanation as to why a 30-year mortgage is a better option when refinancing.

So, if you haven’t refinanced lately, you should consider it. And when you do, do not be tempted to obtain a 15-year mortgage. Instead, stick with the 30-year loan. Here’s why.

Let’s assume that  you are refinancing a $250,000 loan and have two choices, as shown below:

As you can see above, it appears that with the 15-year loan, you are saving  $144,614 in interest by paying just $539 more each month!!  In reality, the truth is not always so simple. The table above compares the interest you’d pay over 30 years versus the interest you’d pay over 15 years, but in order to make an accurate comparison, we need to see what happens with each loan after the first 15 years.

During the first 15 years of a 30-year loan, you’ll pay a total of $151,280 (or 68% of your payments) in interest. That means 68% of your payment is tax-deductible. With the 15-year loan, only 26% of your payment is interest — meaning much less is tax-deductible. What does that mean for you? Let’s say you are in the 25% tax bracket

15-year later…………………..

Not only does the 15-year loan force you to pay an extra $539 a month, you’ll also spend an extra $116,077 in interest! And if you were to invest that $539 difference at an annual return of 7%,** you’d accumulate $170,843 — enough to pay off the $169,710*** balance that’s left on your 30-year loan after 15 years!  When weighing whether to refinance, contact me  to help you make the right decision. As the above demonstrates, the best choice is not always obvious!

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Growing up, my parents and grandparent taught me that debt was something you wanted to live without.  I can still  recall my parents telling me ,”Ana,  make sure you buy a house because it’s the American Dream , but make sure you pay it off as soon as possible.'”  As a mortgage consultant, I was taught the opposite. The idea of  paying off your mortgage  was simply a dumb thing to do. The concept has always been that as homeowners, the tax benefit is the most important thing to have.

Now as the years progressed, I realize that my parents where right all along. I recently came across a great article that explains  why you should pay-off your home. The article was written by Dave Ramsey. Dave Ramsey is one of my favorite financial advisors and author.

According to him there are three reasons why you should pay off your home that people rail against.

1. The first is that paying off the house lowers risk, because you won’t be foreclosed on if your house is paid off. It gives you great security.
2. The second reason people say not to pay it off is because they say you can make money by borrowing money at a low interest rate on your house and investing it in the stock market. But by the time you adjust for risk and taxes, you don’t come out ahead. I would never borrow on my home to invest.
3. The third reason that people say not to pay off your home is that you’ll lose your tax deduction. If you have a $200,000 loan at 5% interest, you’d pay about $10,000 a year in interest, which would give you a $10,000 deduction. If you make $70,000 a year, that deduction is saving you $2,500 in taxes if you’re in a 25% tax bracket. You are sending Countrywide Mortgage $10,000 to keep from sending the government $2,500. That’s stupid. You are better off being debt-free and giving your church $10,000. You’ll save on taxes and do some good with the money.

I could not have said better myself!!

What other reasons do you have for paying off your home? Please post your ideas!

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I came across some vital information posted by CAMB(California Association of Mortgage Bankers), and it pertains  to anyone who had a Countrywide mortgage.

Apparently, California is among eleven states that are part of a lawsuit settlement that requires Countrywide Financial to  help  modify home loans of borrowers who are having trouble keeping up with their mortgage payments, according to an Associated Press story.  The plan calls for Countrywide to reduce interest rates  in some cases and lower the principal that is due in other cases. If you are a Countrywide borrower, Eve Mitchell , a real estate reporter,would like to talk with you for a story.  Please call her at  925-952-2690 or email at emitchell@bayareanewsgroup.com.

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