HARP 2 - Refinance Help for Underwater Homeowners

The HARP 2 refinance initiative is known by several other names including the Making Home Affordable program, Fannie Mae DU Refi Plus and Freddie Mac Relief Refinance. Regardless of the name, Cornerstone Mortgage is offering this special government sponsored refinance product. In fact, we are going to service many of these loans ourselves, allowing us a great deal of flexibility in terms of underwriting and approval.

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Quick Guide to Fannie Mae Homepath Financing

If you've looked at foreclosure listings, it is likely you've come across Fannie Mae properties that are eligible for Homepath Financing.  But what is Homepath and what are the benefits?

First off, we need to make a distinction between the standard Homepath Mortgage program and the Homepath Renovation Mortgage.  I have not found any providers for the renovation program (EDIT!  Cornerstone Mortgage has recently become a preferred provider of Homepath Renovation Financing!  Call me for details at 314-599-0511 until I post something more specific here), so this discussion will involve just the standard Homepath product (for renovation loans, see my post on the FHA 203k program).  When looking at a listing, you'll need to find verbiage indicating that the property is eligible for the standard program and not just the renovation product.  The renovation product also uses a different graphic seen here.

If you are buying a home with the intention to live there, Homepath offers you the ability to make a small down payment of 3% and NOT pay PMI.  This sounds great, but this is NOT a unique offering.  In fact, you can obtain a normal conventional loan with a 3% down payment and not pay PMI at a lower rate than you can obtain through the Homepath program.  So, what is the advantage of Homepath?

The primary advantage of Homepath is that the loan does NOT require an appraisal.  This might not seem like a big deal at the outset, but keep this in mind - properties in any state of disrepair or with any incomplete elements are often ineligble for financing due to the findings of the appraiser.  If an appaiser notes that light fixtures aren't properly installed or that copper pipes have been removed, their report will cause your loan to be denied.  With Homepath, you can compeletely circumvent the appraisal process and finance a property that might be ineligible otherwise. 

This leads us to the other group that can take advantage of Homepath - real estate investors.  As an investor, you will need to put just 15% down, but you too can take advantage of the appraisal waiver and lack of PMI.  This can put you in a position to compete against the cash buyers that too often are the only ones eligible to purchase properties in a state of disrepair.  

If you are considering purchasing a Homepath eligible property, give me a call to discuss your scenario.  Many lenders either don't offer this program or do not understand how it works.  

Good Article for First Time Buyers

http://realestate.msn.com/july-buying-advice-before-you-shop-line-up-a-loan?GT1=35006#atoolb

FHA 203k Rehab Financing Made as Simple as Possible

If you ask your Realtor or loan officer about the FHA 203k rehab loan, they are likely to indicate that these loans are more trouble than they're worth. You'll hear horror stories involving mountains of paperwork, funding delays, punitive closing fees and loans that simply don't close. I was actually one of those loan officers that advised my clients against taking these loans! But since joining Cornerstone Mortgage, I have seen that with the right preparation and guidance, there is nothing to fear about 203k loans. The following is the best, most comprehensive explanation of the process from application to closing and beyond.

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Get Real-Approved, not Pre-Approved

Smart prospective home buyers know to get pre-approved BEFORE shopping for a home.  Many will speak to a lender for a few minutes, part with some personal information about their finances and receive their pre-approval right away.  Now, there is nothing wrong with this process.  In fact, I provide pre-approvals to new clients all the time!  However, while smart buyers get pre-approved, smarter buyers will take it to the next level and pursue a full approval before writing their first offer.  This is what I like to call a "Real-Approval".

Since joining Cornerstone Mortgage, many of my clients have taken my advice and received a letter that makes their purchase offer shine.  Instead of a letter that is subject to formal verifications of any number of variables, they obtain a letter that states quite plainly:

"Congratulations!  Your loan application in the amount of $XXX,XXX has been approved."

This means that they can focus on finding the right house, rather than simultaneously getting various ducks in a row for their loan.  

Another advantage is that a buyer with one of my "Real-Approvals" can negotiate aggressively with sellers. Buyers can prove they will close - and have the ability to close FAST.

You might think that I've just come up with a gimmicky name for something any lender can do, but you're wrong.  The vast majority of lending institutions around will only formally underwrite files for approval that already have live sales contracts in place.  This is one of the reasons you hear so many horror stories from friends and relatives that have purchased (or attempted to purchase) homes recently.  

Given the complexity of today's lending environment, if you are looking to purchase a home, please call me to obtain your "Real-Approval" today!