Harp 2 No Income Verifier Refinance
by Le Le from California
Ask Kate if Harp 2.0 no income verifier refinancing opens doors: Underwater homeowners, go get your piggy banks! Instead of focusing on debt-to-income ratios, Fannie Mae and Freddie Mac now allow participating HARP lenders to refinance a mortgage without verifying income if the homeowner has the equivalent of 12 house payments in the bank.
Le Le asks Kate about Harp 2 Refinancing
Hi Kate, My husband and I both have credit scores in the 800's and he has a steady income.
But we have been turned down again and again to refinance through Harp because of our debt to income ratio.
We had to rent out our home and now rent elsewhere for my husband's job relocation.
The bank included both our mortgage payment and our rent as part our debt. But they will not include the rent as income or to cover one of the payments.
Besides that, we only have a $500 car payment and $24 credit card payment. Yet they say our debt to income is 70%.
Next year, we will claim the house as investment on our taxes. But we are wanting to refinance now and one company told me they would have to see the rent showing on our taxes for at least a year or maybe two.
Any chance that there is a mortgage or bank out there that will help with the no documentation set in place through harp? We also have a great amount of money in the bank, but didn't seem to matter to the bank we tried to refi with last year.
One last thing: Bank of America is our original servicer who still carries our loan. We have a 6% interest rate and owe $204,000 but the house is worth $250,000. They are willing to do HARP, but want to add about $7000 to the loan balance in closing costs with an interest rate at 4.75%.
We plan on keeping the house for at least 10 years. Should we bother to refi or just keep the way it is? To me the closing costs and interest rate seem high, when a principal residence interest rate is about 3.5%.
Kate Answers: Harp 2 No Income Verifier Refinance Opens Doors
Dear Le Le,
Don't let last year's lack of success with HARP approval stop you from reapplying today!
The no income verifier guidelines of September 2012 are opening doors for homeowners. Go for it!
Instead of requiring at least one verifiable source of income, lenders can refinance underwater mortgages if the homeowner has the ability to document the equivalent of 12 mortgage payments saved in the bank.
The savings can be documented in:
- Checking accounts
- Savings accounts
- Vested retirement accounts
- Stocks, bonds, and mutual funds
Note that the amount must include the total house payment - principal, interest, taxes, insurance, and homeowner association dues (PITIA). For example, if your PITIA is $2000 a month, you must document at least $24,000 from the above mentioned sources.
Compare HARP 2 Mortgage Rates and Closing Costs
One reason the BOA rate and fees may seem high is because renting out your home, even temporarily, made it a non-owner occupied property according to lending guidelines. This category is charged higher rates and fees.
But you won't know for sure until you compare lenders. If you go to Is HARP or HAMP Best
and scroll down to the comments, you will find ways to make a lender sit up and take notice of your loan application.
More Improvements to HARP 2 Mortgage Guidelines
HARP 2 guidelines for removing a co-borrower from an underwater mortgage have also changed for the better. The same is true for unexplainable deposits on bank statements.
Less paperwork and hassle for homeowners! Less scrutiny by lenders! Go to HARP 2.0 Embraces No Income Guidelines
for the rest of the details.
Tip: Don't be surprised if you run across a mortgage originator who hasn't heard of the most updated HARP 2 guidelines. Some banks like to keep their personnel in the dark because they've added stiffer requirements to Fannie's and Freddie's.
There's no getting around it. Finding a qualified HARP 2 lender takes elbow grease. But don't let this take the steam out of your search. Remember, it's your
mortgage! No one is going to care about it more than you!
Good luck and best wishes,
Here's a simple way (and one of many methods) to decide if refinancing your mortgage is worthwhile. Calculate the difference between your proposed HARP and current house payments. Then divide the total closing costs by the difference. Now you know the number of months it will take until reaching a break even point!
Consult your tax or financial adviser who can help you based on your personal situation.
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