As a Mortgage Broker for more than 15 years I’ve grown cautious about the “flim-flam” offers of things to good-to-be-true. I have family members that have been stuck in upside down loans with high interest rates. I lost my home back 3 years ago along with 9 investment properties. I’m not singing the blues. But, I do have compassion for those who feel the pressure and concern about what tomorrow holds. Many are aware of Obama’s announcement about help coming under the Harp 2 program for these folks. While we were supposed to receive the list of qualifications for this program a few months ago, we in the business have wondered if this was more about pushing up voter confidence ratings or real follow through.

Today I discussed this program again and was encouraged to receive an update from a trusted source inside the lending industry. According to an executive vice president for one of our best and largest lenders, the Harp 2 program will start funding loans in March of this year (2012). This means we should see guidelines and begin processing these loans in February (only weeks away).

According to this source we have confirmation that home values will not be a limiting issue for loan qualification. This is the great news that homeowners have been waiting on for years now.

In addition, there seems to be consistent confirmation that the investors will be willing to also overlook the income qualification as well. This will allow those who have been self employed and the “stated” income qualifying homeowners. This group has been left on the sidelines simply because they have taken advantage of the tax deduction allowance but then are left with a tax return income that is too low to qualify for a refinance and decrease of their interest rate/program. This has left this group stranded with 5-7% interest rates from years past.

To put this in perspective, two years ago 30 trillion was funded 2 years ago. Last year the number dropped to 22 trillion. It was expected that this year would be on track to fund 20 trillion. But, with the new Harp 2 program in place it is expected that this number will go up as high as 38 trillion.

Have you been praying that something would change and you could afford to keep your home? Then contact us right away and get started on your refinance even though your home lacks equity? Call 877.922.3863 today. Stop worrying about the future of your home. Call 877.922.3863. Let us help you get things started by supplying you the list of the 8 items we need to start your file. 877.922.3863.

Inflation
One factor that we can’t ignore when it comes to home loan rates is inflation. Why? Inflation is the arch enemy of Bonds and home loan rates. If inflation rises, investors in Bonds demand a higher yield to offset the lost buying power inflation imposes on a fixed payment. As home loan rates are tied to Mortgage Bonds it means home loan rates move higher. Sometimes even hints or whispers from the media that inflation is on the rise causes Bonds and home loan rates to worsen.

So what’s ahead for inflation in 2012? In the Fed’s Policy Statement from the December 13, 2011 they stated that inflation is “moderating.” This ambiguous term seems to be good news for home loan rates. However, it’s important to note that core consumer level inflation actually inched higher in 2011.

Last year, consumer inflation and the expectation of inflation rose as the Fed embarked on a second round of Quantitative Easing (QE2) in the fall of 2010. They bought Mortgage Bonds to help boost the economy and the housing market. If inflation remains at current levels or pulls back a little, the Fed may just do another round of QE3 in the spring.

If the Fed does another round of QE this could cause inflation to rise. If inflation does rise in 2012, it could have a negative impact on home loan rates. This is balanced with the uncertainty over the Euro in Europe. This could continue to lead to a safe haven trade in our Bond markets. This would provide help for Mortgage Bonds and home loan rates and essentially balance out the negative impact inflation usually has on Bonds and home loan rates.

Does this analysis approach to the largest single investment you will ever make help with your decision? Then call 877.922.3863 and discuss your refinance or purchase options. Don’t set aside this big decision. Call 877.922.3863 now.

While home loan rates finished the year at historically low levels, the housing market did not see a major improvement in the second half of the year as some experts expected. The labor market did make some modest improvements, but it is still persistently weak and this is one area of the economy in particular that we need to see consistent improvement in to help our long-term economic outlook.

Also, weighing on consumer confidence the economy in 2011 was the first downgrade of US Debt in history. The worsening and spreading debt crisis in Europe capped a year filled with financial and political uncertainty. The situation in Europe is the perfect place to begin a 2012 outlook.

The Euro Debt Debacle
What may happen with the US economy and home loan rates in 2012? The major viable affects of inflation, housing market, job market, and the Presidential election may be dramatically influenced by how the Eurozone handles their debt crisis. Europe has way too much debt. A lot of this debt sits on the books of the banking sector throughout the Eurozone.
In good economic times, banks could potentially “grow” their way out of their recapitalization problem by doing a lot of business and writing a bunch of loans. It is highly questionable that this is not likely to happen with the Eurozone slipping into a recession in the first half of 2012.

Ultimately, Europe needs to provide a large financial backstop for their banks and sovereign debt in order to fix their problems longer-term. And this is something that Germany, who holds the cards in this negotiation, strongly opposes. Germany prefers to have each country shore up their own individual finances, act responsibly, and pay down their debt. Yet, Greece, Italy and other highly indebted countries have struggled to provide tough measures that would help them do so. The situation in Europe is definitely a wild card headed into 2012.

The bottom line is that as long as the uncertainty continues, the US Dollar and US Bonds should benefit. As investors will see our Bonds (including Mortgage Bonds, upon which home loan rates are based) as a safe haven for their money. This could help keep our home loan rates relatively low in 2012.

Is financial evaluation related to mortgage rate choices and timing important to you. Then call 877.922.3863 and speak with a trusted mortgage broker who can help make sure you are on the right path. 877.922.3863.

If you’ve decided to refinance your mortgage, but don’t want to restart your 30-year payoff clock, a 15-year loan might be just the ticket. Interest rates on 15-year loans have fallen to record lows and a shorter loan term can be a big money-saver when it comes to total interest expense.

Low 15 Year Rates
The average interest rate on a 15-year fixed-rate loan was just 3.25 percent with an average 0.6 points in the week ended Dec 23, 2011. While not all borrowers can qualify for the lowest interest rate, that 3.25 percent average should be a very attractive number for many homeowners who want to refinance.

A 15-year loan will have a higher monthly payment compared with a new 30-year loan because your loan payments will be are amortized over 15 years, instead of 30 years. But that higher payment would be offset by significant savings on the total amount of interest you’ll pay over the life term of the loan.

Significant Interest Savings
Here’s an example that illustrates just how much interest expense can be saved with a 15-year loan compared with a 30-year loan.

• 15-year loan     30-year

• $250,000          $250,000       Loan Amount

• 3.25%               3.875%          Interest Rate

• $1,757              $1,116           Monthly Payment

• $66,200            $151,760      Total Interest Cost

• $85,560                                  Savings

Notice that the loan amount is the same for either loan term, but the interest rate and total interest expense are significantly lower on the 15-year loan. The total interest saved over the entire term with the 15-year loan would be approximately $85,560. This is a considerable sum. And even if the loan were paid off sooner than 15 years, the savings would still be significant.

How Much is $85,000 in Savings Worth to you?
The decision to get a 15-year loan shouldn’t be taken lightly since the monthly payment will be higher. You should feel confident that you’ll be able to make that higher payment every monthly before you decide to get a 15-year loan.

Purpose Funding can help you figure out how much your monthly payment would be on a new 15-year loan and decide whether refinancing with a 15-year loan would be a good choice for your personal situation.

Call 877-922.3863 and see just how much you could save.

The government announced a couple of weeks ago that they will be expanding the HARP program for homeowners who owe more on their mortgage than their home is worth. This page will answer all the questions about how this program works.

So, if you are underwater on your mortgage, then read on to make sure that you qualify for a refinance of your mortgage, without the need to pay down principle and without needing mortgage insurance.

What is HARP?
HARP is a program that began in April 2009 to help underwater homeowners. HARP stands for Home Affordable Refinance Program – and depending on the agency or lender, it also goes by the names: Making Home Affordable, Refinance Plus, Relief Refinance, and sometimes the Obama refinance program. All these terms are synonymous with the HARP program.

What is needed to qualify?
1.    Have a current loan that is owned by Fannie Mae or Freddie Mac.
2.    Your current mortgage must have been closed before June 1, 2009

Fannie and Freddie do not service loans, so they may own your loan even though you make your payments to another bank or lender. So the first step is to check to see if they have your loan. Check Fannie Mae Lookup here, then check Freddie Mac Lookup here.

If either entity owns your home loan, then you are HARP-eligible. A If not, but you have a VA loan or an FHA loan, then you are eligible for an FHA streamline refinance or a VA Streamline refinance.

Q & A on the New HARP 2.0 Refinance Program

Now that I know my loan is owned by Fannie or Freddie, am I automatically eligible for HARP?

No. That is just the prerequisite. There are further qualifications.
1.    You have to be current on your mortgage with no mortgage late payments for the past 6 months, and can only have 1 30 day late payment in the past 12 months.

2.    You have to qualify based on credit and income, just like with a traditional refinance.

Do I Need an Appraisal with the HARP Refinance Program?

No. Well, maybe not.

Under the original program the loans were limited to 125% of the value of your home. That is why a lot of homeowners could not take advantage of the program, because they were further upside down than that.

HARP 2.0 replaces the obligatory appraisal with a computerized model of your home value, called an Automated Valuation Model (AVM). So, whether you owe 110% or 300% of the current value of your home, you will be able to refinance to a lower rate.

Some lenders and in some cases an actual appraisal may be required. Mostly just to ensure the house is there and in good physical condition.

What if My Loan is Not Owned by Fannie Mae or Freddie Mac?
Then you will not be eligible for this program. A However, if you have an FHA loan or a VA loan, then you may qualify for an FHA Streamline Refinance or a VA Streamline Refinance.

Do I Need to Go to My Current Lender to Refinance under HARP?

No, any participating lender can help you refinance your home.

I Don’t Have Mortgage Insurance (PMI) Now on My Home. Will I Need PMI with the HARP Program?

No. If your current loan does not have Mortgage Insurance, you will not have PMI on your new HARP Program Refinance either.

On the other hand, if you currently have Mortgage Insurance on your loan, then you may still be able to refinance under the HARP refinance program, but your lender will have to get the MI to be re-issued. A So, it may take a little extra time to process the loan and get your loan closed. If you have PMI, then make note of that up front at loan application.

What is the Largest Loan amount I can get with the HARP Program?
This is a conforming loan, which has upper limits of $417,000 in most areas. In some counties the conforming limit is higher, such as Greene County Georgia has a loan limit of $515,200.

If your current loan is larger than that, then you do not have a Fannie or Freddie loan. It is a Jumbo loan. We can help you refinance, but not under this program.

Can I do a cash-out refinance with the HARP Refinance Program?

No. The HARP refinance program does not allow for cash out refinances. Only ‘rate and term’ refinances to lower the rate or shorten the term of the loan are allowed.

Can I refinance Investment Properties with the HARP Refinance Program?
Yes. So long as the loan is owned by Fannie Mae or Freddie Mac, you can refinance an investment property or a second home with this program.

Fannie Mae does have a limit of 10 financed properties. If you have more than 10 properties with mortgages, then you will not be eligible for HARP; unless you are able to pay off some mortgage loans in order to qualify.

Similarly, Freddie Mac has a limit of 4 financed properties. If you have more than 4 and Freddie Mac owns the loan, then you will not be eligible for HARP.

Can I Roll My Second Mortgage or Home Equity Line into the new First Mortgage with HARP?

No. You cannot combine a first and second loan with HARP. This program is for first mortgage liens only. We will need to ‘re-subordinate’ your second mortgage to the new first mortgage. A Most lenders are charging a fee for the re-subordination process.

What are the HARP Refinance Program’s Interest Rates?
Mortgage Rates for the original HARP program were slightly higher than the going rate for traditional mortgages. We are told that under HARP 2.0 the rates will be the same as with traditional mortgage loans.

There are, of course, ‘loan level pricing adjustments’ for credit score and property type (investment vs primary residence, etc), just like for traditional mortgages. But, there will be no adjustments for Loan-to-Value.

How long will the HARP Refinance Program be available?
The HARP Program is available for loans that were closed prior to June 1, 2009, until the program ends on December 31, 2013.

The official guidelines for the HARP 2.0 program will be published on November 15, 2011; and we should be able to begin closing these loans in early December.

If your loan is HARP-eligible, then I suggest you take advantage early, since interest rates are at such lows right now, and we know that mortgage rates change every day.

There is no fee for applying, and I will be happy to get a rate quote for you.

Finally, the HARP Refinance Program is not intended to help stave off foreclosures. It is for homeowners who are current on their mortgage loans. If you are currently facing foreclosure, call your current loan servicer right away to try to work something out.

Today, the mortgage investment business is again struggling over the risk of the “subprime” loan investment. But, what exactly is a “subprime” loan, really.

The SEC accuses Dan Mudd, Richard Syron and others of underreporting the GSEs’ subprime exposure.

In the Fannie suit, the SEC says that at Dec. 31, 2006 Fannie had subprime exposure through its “Expanded Approval” program of $43.3 billion, but in a public filing the GSE said that the exposure was just $4.8 billion. Could it be that Fannie felt that EA loans were not really subprime?

In other words, understanding subprime is a matter of semantics. One man’s subprime is another’s prime. But as we all know it should boil down to FICO scores and debt-to-income ratios – shouldn’t it?

The difficulty is making the system as objective as possible.

Bankruptcy? Foreclosure? Low Credit Scores?

Are you wondering how to find financing because of a bankruptcy or foreclosure? Do you wonder if how long you are going to be stuck in “bad credit jail?” We can provide a plan that will give you hope. Call us at 877.922.3863.

Owning again is possible… much sooner than you would think. 877.922.3863.

Especially during this season of economic challenge (to say it as kind as possible) these questions arise for those ready to refinance. The following comments help bring some light to a challenging economic question that feels like one of my Economic professors opening class discussions.

Even though there are signs of progress in the economy and little left that the Fed can do to help anyway. The stock market often goes into a funk on the news that the outcome of a Fed meeting is to maintain the status quo. To explain this reaction, it may help to examine where the interests of stock investors and those of the economy at large may diverge a little bit.

Fundamentally, stocks are valued based on the projected value of future earnings, discounted by interest rates. This sets up an equation for stock valuations where earnings are the numerator, and interest rates are the denominator. Mathematically, the value of this equation can rise if the numerator is increased, or if the denominator is decreased.

In other words, stock prices can rise if earnings grow–or if interest rates fall. The stock market was looking for a quick fix from the Fed yesterday in the form of even lower interest rates, but it didn’t get it. For the economy as a whole, though, what matters is earnings growth, and that is simply going to take a little longer to develop.

If this type of question is on your mind, call and discuss when the best time to move forward on your refinance. We want to help you make an informed decision. Call 877-922-3863 now and start saving.

The new program greatly reduces or eliminates the risk-based fees Fannie and Freddie charge on many loans and virtually eliminates the chance that lenders will have to pay for losses on loans that go into default if they made underwriting mistakes. It also vastly streamlines the underwriting process.

Many may not qualify for the new program, but those who do could find it much easier and possibly cheaper to refinance than those who don’t. Although lenders can begin taking applications Dec. 1, it could take several months before the new loans are made. Fannie Mae said it won’t begin buying certain types of refinanced loans until March.

Who Will Qualify?

To qualify, your existing loan must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009. Your loan balance must be more than 80 percent of your home’s market value. You can have no late payments on your existing mortgage in the past six months and no more than one late payment in the past 12 months. You are ineligible if you previously refinanced through HARP.

How Will it Help?

The new program improves on the existing HARP refi program by letting borrowers refinance into a new fixed-rate loan no matter how much they owe. The existing program caps the new loan at 125 percent of the home’s market value.
You can also refinance into a new adjustable rate loan that has a fixed rate for at least the first five years, but in this case your new first mortgage cannot exceed 105 percent of the home’s value.

The new program greatly reduces or eliminates the fees Fannie and Freddie charge on loans based on risk characteristics such as the borrower’s credit score and loan-to-value ratio. On a riskier loan, these fees sometimes exceed 3 percent of the loan balance and make refinancing uneconomical for many borrowers.

Under HARP 2, the fees will be capped at 0.75 percent on most loans and will be zero on fixed-rate loans with a term of 20 years or less.

Appraisals?

In most cases, borrowers won’t have to pay for a new appraisal (Fannie or Freddie will use their automated in-house appraisals) or have any particular debt-to-income ratio or credit score.

Income Qualification?

Borrowers who refinance through their existing loan servicer generally won’t have to document their income or assets or have a particular credit score or debt-to-income ratio. The lender will only have to verify that one borrower on the loan has a job or other source of income, but not the amount of income.

If they refinance through a new lender, they will have to meet additional underwriting requirements, but not as many as people who are refinancing through traditional routes.

2nd Mortgages?

Borrowers can have a second loan on the house of any amount and still qualify, as long as the holder of the second mortgage subordinates it to the new loan. Most of the big lenders have agreed to do so, but there is no guarantee they or others will. “It’s going to be case by case,” says Brad Seibel, director of residential lending with Fremont Bank.

If borrowers have mortgage insurance on the existing loan, they must maintain it, but they should be able to transfer that insurance to the new loan at the old premium rate, according to Freddie Mac. The big mortgage insurers have agreed to allow this, but again there is no guarantee all will.

It’s a big plus if they do. Normally refinancers must take out a new policy at today’s rates, and rates have gone up significantly in the past few years. The higher cost has discouraged some homeowners from refinancing.

Incentive for Lenders

The new program, in many cases, will virtually eliminate the risk that lenders will have to pay for losses on either the existing or the refinanced loan under HARP 2. This could be a big incentive for lenders to refinance loans, especially ones they already own.

But there are still many questions about the program, such as what interest rates banks will charge, whether they will impose additional fees or underwriting requirements beyond what Fannie and Freddie require and whether investors will be willing to buy securities backed by these new HARP 2 loans.

It is expected that the program will reach the government’s target of refinancing 1 million loans, and possibly even 2 million.

Are you sick of your high rates and that you have not been able to take advantage of low existing rates? Then call 877-922.3863 today and see if you fit into the new HARP 2 program.

877-922.3863.

On Nov. 15, the government will release the details to the expanded HARP refinance program. Lenders are prepped and expected to be accepting applications for the “new and improved” program.

Since lenders will be crushed with new refinance applications come next month, underwriters will prefer to deal with the “cleanest” files first. There is a distinct advantage to being first in line with an underwriter–not only can your loan close sooner, you may qualify for better loan terms.

If you’re among the millions of U.S. homeowners anticipating HARP 2.0, you better properly prepare. If the number of applications becomes too overwhelming, some lenders may even raise their rates to slow new, inbound applications.

New HARP 2.0
The defining characteristic of the newly expanded HARP program is the allowance of an unlimited loan-to-value (LTV) ratio. No matter how underwater you are, you can still apply.

HARP 2.0 gives homeowners the ability to refinance into today’s low mortgage rates without concern for private mortgage insurance, exorbitant closing costs and fees, and not even requiring an appraisal in most cases. Beyond that, a HARP loan looks a lot like any other mortgage. Lenders are looking for borrowers with solid incomes, good assets and quality credit scores.

5 steps for your HARP preparation

Since HARP mortgages are backed by Fannie Mae and Freddie Mac, the underwriting process will resemble that of any other conventional mortgage. There will be loan disclosures to sign and supporting financial documentation to remit.
To ensure your HARP application lands on the top of the stack, you’ll need to follow these 5 preparatory steps:

1. Ensure Fannie or Freddie backs your mortgage

Since day one, only those with mortgages owned or guaranteed by Fannie or Freddie could qualify. Fannie and Freddie each have a loan lookup tool which allows homeowners to search for their loan.

To check if your mortgage is backed by Fannie Mae, visit http://www.fanniemae.com/loanlookup/. If your mortgage is not found, try Freddie Mac’s loan lookup at https://ww3.freddiemac.com/corporate/.

Mortgages not listed on either website are not backed by Fannie or Freddie and, therefore, are not HARP-eligible.

2. Determine if your mortgage is old enough

Only those whose mortgages were securitized prior to June 1, 2009 can apply for HARP. In general, this means that your mortgage must have started in mid-May 2009 or earlier. You can find your mortgage start date by looking at your closing paperwork. In the upper-right-hand corner of your settlement is your “funding date”–that’s the date you’re looking for.

Note: Since it can take up to 60 days to securitize a Fannie or Freddie loan, even if your start date is close to June 1, 2009, you still may be ineligible.

3. Does your current mortgage have LPMI?

HARP 2.0 is designed to help homeowners with or without private mortgage insurance (PMI), but the government’s revisions specifically excludes homeowners that chose lender-paid mortgage insurance (LPMI).

LPMI is mortgage insurance that’s built into your rate. If your mortgage statement itemized your monthly PMI, you have borrower-paid mortgage insurance and are thus eligible. All other mortgage insurance types are ineligible–including single-premium insurance.

4. You must be current on your payments

HARP 2.0 requires that all homeowners have made their last six mortgage payments on time, with a maximum of one 30-day late payment in the past year. This information is verified against your credit report, so be sure to review your credit reports prior to submitting your application.

5. Find and organize your supporting paperwork

Since HARP mortgages are underwritten like every other type of mortgage, you will be required to provide bank statements, a drivers license, homeowners insurance information, pay stubs and W-2s. If you’re self-employed, you’ll have to provide a few years of tax returns to verify your income.

Your speed in which you return these items to your lender can dictate your mortgage rate. If you plan on applying for HARP 2.0, gather all these items in advance. The less you leave to the last minute, the smoother your application will go.

Again, there will be a crush of new applications when HARP 2.0 is open to the public. If you’re going to apply, you must follow these tips to be one of the first approved and one of the fastest to close.

We suggest you call as soon as possible to discuss your qualification to participate in this program that is available for a limited amount of time. Call us now at 877-922-3863.

Mortgage shoppers hear many strange tales about the home loan-shopping process. Here are 5 common myths about shopping for a mortgage and the facts you should know:

Myth 1: Shopping for a mortgage loan will hurt your credit score.

Fact: Credit scoring companies know most people want to shop around for a mortgage or car loan. That’s why their formulas allow a window of time during which multiple inquiries about your credit will be counted as only one inquiry. If you stay within that window, you don’t have to worry about shopping for a loan from multiple lenders.

Myth 2: Everyone can qualify for the low interest rates advertised on television.

Fact: Advertised interest rates may require that you have a very high credit score or pay a lot of upfront fees that add to the cost of your loan. The best way to find out exactly what interest rates you’ll qualify for is to shop around and compare loan offers from multiple lenders. The rates you’ll be offered will depend on your credit score, the type of loan you want and your down payment (or the equity in your home) as a percentage of the amount you want to borrow.

Myth 3: If the Federal Reserve raises interest rates, mortgage interest rates will go up.

Fact: The Federal Reserve sets bank interest rates, not mortgage interest rates. While the Fed doesn’t directly control long-term interest rates for mortgages, auto loans, credit cards or other types of consumer loans, the interest rates on those types of loans can be affected by the Fed’s decisions, actions and statements. But keep in mind that if you have a fixed-rate loan, the rate won’t change no matter what the Fed does. If you have an adjustable-rate loan, the adjusted rates may be indirectly affected by the Fed’s actions.

Myth 4: The loan that has the lowest interest rate or lowest monthly payment is always the best loan.

Fact: Mortgage loans are not all alike. Some have a fixed interest rate while others have an adjustable rate. It’s important to compare more than just the interest rate and monthly payment when shopping for a mortgage. Be sure to look at the loan’s costs and fees, as well as the terms of the loan. For example, some mortgages may offer a low initial monthly payment but require a balloon payment. Or a loan may have an interest-only period, after which your monthly payment will rise dramatically. And some have less expensive costs and fees, which may make sense for your situation.

Myth 5: I may be required to pay a large sum of money up front to guarantee my loan approval.

Fact: The federal government has warned borrowers to be aware of so-called “advance fee loan scams,” in which a lender guarantees that the borrower will be approved for a loan after the borrower pays a hefty upfront fee. Be wary if a lender asks for you to send or wire a large upfront payment to “guarantee” your loan approval. This may be the sign of a scam.

Reputable lenders may charge modest fees to review your credit report and conduct an appraisal during the loan approval process, but they typically don’t approve a loan until they’ve reviewed your financial situation.
For more information about advance fee scams, visit the FTC’s Facts for Consumers.

At Purpose Funding we are straight forward about your options and the pros and cons. We seek to make picking what fits best for your needs simple by giving you enough information to make an informed decision. Call now and speak with a no nonsense senior loan officer.

Don’t delay. Our number is 877-922-3863.