Modest Momentum for HARP Refinances
The program is the lesser-known counterpart to the government’s Home Affordable Modification Program (HAMP) mortgage modification initiative. Whereas HAMP is targeted at homeowners who may be falling behind on their mortgage payments, HARP is for homeowners with good credit who’d like to take advantage of lower interest rates, but have difficulty refinancing because of a lack of home equity . The 130,000 HARP refinances during the first quarter of the year account for a little less than 13 percent of the 1,016,000 Fannie Mae and Freddie Mac mortgages refinanced during the same period. With 752,000 refinances performed to date and the program scheduled to expire in June 2011, HARP still remains well short of its original projections of helping 4-5 million limited equity homeowners refinance to low-interest, fixed-rate mortgages.125 Ltv Refi With Poor Credit - News
HARP, which is limited to borrowers with a Fannie Mae or Freddie Mac-backed mortgage, allows homeowners to refinance their mortgage and any home equity loans at up to 125 percent of their current home value, enabling underwater and low-equity borrowers
And why not - many of these loans, with solid documentation and decent LTV's, are great credit risks. And they provide a good spread versus a bank's cost of funds (whatever they're paying you on your checking account) In fact, it seems that most
Chase can help a customer get a 125 percent loan-to-value mortgage under the federal program, Kershner said. In general, as much as 90 percent of Chase's regional business is from customers refinancing mortgages, he said.
125% Loan to Value and Mortgage Refinance - codywire's blog
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Did you know that 125 % loan to value and mortgage refinance are extremely risky for borrowers?
Well, they are! That’s why you better think twice before jumping into an exotic 125 % loan to value (LTV) second mortgage that allows you to refinance by borrowing more than your home is worth.
It sounds too good to be true, and it is. That’s why the Federal Trade Commission warns, “Borrowers Beware!”
Too many unscrupulous lenders use 125 % loan to value and mortgage refinance to prey on vulnerable homeowners. Even though LTVs opens a door for lots of people to borrow, especially young couples with limited income and often shaky credit, this type of loan comes with a high price.
Interest rates are much higher and closing costs often add up to more than 10% of the loan balance. There have actually been stories of interest rates as high as 30% and hidden fees of 20 points or more.
LTVs are costly because, since there’s no collateral and no way for the lender to foreclose, LTVs are also risky for lenders. So, they make you pay through the nose for the privilege of borrowing.
This high income potential attracts unscrupulous lenders and debt consolidation “advisors,” high pressure home improvement salespeople and so-called foreclosure “rescue” companies willing to take a gamble on the risk of default in return for the huge profits they can make at the borrower’s expense.
They persuade vulnerable homeowners, often people with lower income, high credit card debt or poor credit, into believing that 125 % loan to value and mortgage refinance are in their best interest. And they make an offer that sounds too good to refuse, with very attractive, extremely low monthly interest-only payments. But the offer comes with a huge burden.
Somewhere down the line, usually a lot sooner than you anticipate, you’re going to have to come up with a bundle of money to pay a big balloon payment. By the way, did you know that if you have to move for any reason, you can’t sell your home without first paying off your balloon loan? And where are you going to raise the money, since you owe more than your home is worth?
Think about it!
125 Ltv Refi With Poor Credit - Bookshelf
Analytical Perspectives: Budget of the U.S. Government, Fiscal Year 2011
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