Homeowners Options on Refinance Mortgage Loans

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This guide will cover homeowners’ options for refinance mortgage loans. There are dozens or hundreds of types of refinance mortgage loans. Each loan program has its own guidelines on refinance mortgage loans. Dale Elenteny, a wholesale mortgage account executive and a licensed loan officer at GCA Forums Mortgage, said the following about HARP:

For homeowners who took advantage of the HARP 2 program, there are rumors that the government will extend the HARP program beyond the 2013 expiration date.

How the government can come up with certain specialty refinance mortgage loans from time to time. Government mortgage agencies can change the terms and conditions of the refinance mortgage loans. For example, HUD, the parent of FHA, lowered the loan-to-value from 85% to 80% on cash-out refinance mortgage loans.

HARP Refinance Mortgage Loans

HARP refinance mortgage loans was a brilliant idea by politicians. HARP I and HARP 2 were successes. Many homeowners were anticipating the government would launch HARP 3. My family and I had a very difficult time trying to cope with living with no money. There were days we could not eat or had to skip meals to conserve.

The government has been discussing launching the new HARP 3 programs since last year. HARP 3, also known as the Home Affordable Refinance Program, was the talk of the mortgage finance industry rumors that it was supposed to be launched in 2010. Whatever happened to HARP 3?

Again, homeowners refinance mortgage loans to lower their monthly payments by lowering their mortgage rates. A wise loan officer will review each line item per line item and get the best solution for each mortgage loan applicant. This article will discuss and cover HARP 3: The 411 on Home Affordable Refinance Program updates.

What is the Home Affordable Refinance Program?

Over 2 million mortgage loan borrowers have benefited from the HARP 2 program, the Home Affordable Refinance Program. Fannie Mae and Freddie Mac backed the HARP 2, and the main reason for this mortgage program was to rescue homeowners with upside-down mortgages. HARP is also known as mortgage loans underwater, meaning that your mortgage loan is higher than the home’s value.

Over a million homeowners did not qualify for the HARP 2 mortgage program because Fannie Mae or Freddie Mac did not own their mortgage loans. Once launched, these people would be eligible for the new HARP 3 mortgage loan program.

The HARP 2 program began in mid-2009. The HARP 3 program is similar to the HARP 2 program but would benefit homeowners who did not qualify for the HARP 2 program. To qualify for a HARP 2 program, a homeowner’s mortgage loans had to be owned by Fannie Mae or Freddie Mac before June 2009. If the mortgage loan was not a Fannie Mae or Freddie Mac loan, the homeowner did not qualify.

When To Expect HARP Refinance Mortgage Loans

The proposed new Home Affordable Refinance Program 3 would benefit more than a million homeowners whose mortgage loans are not Fannie Mae or Freddie Mac loans and whose mortgage loans are higher than the value of their homes.  Here is what Dale said about HARP refinance mortgage loans.

For a homeowner to qualify for the new proposed HARP 3 mortgage program, they must not have any late payments for the past 12 months, and their mortgage payments must be current.

The government would allow those homeowners who took advantage of the HARP 2 mortgage program to RE HARP. There are many refinance mortgage loans. However, HARP loans were a special refinance mortgage loan program that millions of Americans took advantage of, says Dale Elenteny of GCA Forums Mortgage Group.

Re-HARPING Refinance Mortgage Loans

By re-harping, a homeowner who had a HARP 2 mortgage loan before can qualify to refinance their homes again under the HARP program to take advantage of lower mortgage rates.  Under the current HARP guidelines, those who took advantage of the Home Affordable Refinancing Program once before cannot use it again.

For homeowners who took advantage of the HARP 2 program, there are rumors that the government will extend the HARP program beyond the 2013 expiration date.

For those homeowners who did not qualify for the HARP 2 mortgage program or are interested in the proposed new HARP 3 program, contact us at GCA Forums Mortgage Group at 262-627-1965. Text us for a faster response.

There are many different types of refinance mortgage loans. Rate and term, cash-out, VA and FHA streamline, and the now defunct HARP loans.

HARP 3 has not been launched yet, and there is no word on when, if ever, HARP 3 does not seem to ever come to market—delay after delay. Many wondered for many years if HARP 3 would ever be launched. Many mortgage professionals and homeowners who do not qualify for the HARP 2 have been waiting for the HARP 3 to be launched but to no avail. GCA Forums Mortgage Group has hundreds of refinance mortgage loans through its network of 210 wholesale investors.

All You Need to Know About Options Available Homeowners Have when Refinancing Mortgage Loans

Reasons to Refinance a Mortgage Loan

Applying for a mortgage loan can be a tedious process that requires a lot of time and resources. However, refinancing can be a lot easier once you have one. Mortgage refinancing works by giving you a new loan with better terms while paying off the previous one. Whether you need to lower the monthly payments, shorten the payment period, or access the equity in your home, having multiple refinancing options can help you with decision-making.

This guide will explain all the options available for refinancing mortgage loans so that you can choose one that best fits your needs.

Categories Related to Mortgage Refinance Options

Rate-and-Term Refinance

As the name suggests, this type of loan allows you to change the interest rate or the loan term. And what is better is that you can do so without additional funds.

📌 Best suitable for homeowners who want to:

• ✔ Start gradually reducing monthly payments by switching to a loan with a lower interest rate.
• ✔ Move from an adjustable-rate mortgage (ARM) to a more stable fixed-rate mortgage.
• ✔ Shorten their payment duration (from a 30-year mortgage to a 15-year).

💡 Example:

• Let’s assume a certain homeowner has her mortgage set at 6.5% interest.
• If she refinances to 5.0%, she could also save hundreds per month.

Also, a 30-year mortgage can be refinanced to a 15-year term, enabling faster repayment.

Cash-Out Refinance

A cash-out refinance allows homeowners to borrow more than they owe on their current mortgage by taking a higher loan amount and using home equity as cash.

📌 Best For Homeowners Who Want To:  

• ✔ Access money for home improvements, debt consolidation, or investment
• ✔ Take advantage of appreciating home values
• ✔ Pay off high-interest-rate credit card debt

💡 Example:  

• Home value: $400,000
• Mortgage balance: $250,000
• New loan amount: $300,000
• Cash received: $50,000*
• *minus closing costs

⚠ Key Considerations:  

• Cash-out refinances could increase monthly payments if they increase the loan amount.
• Most lenders require at least 20% equity.

FHA Streamline Refinance (For FHA Loan Holders Only)

The FHA Streamline Refinance is a government-backed program that offers refinancing options without needing an appraisal, credit check, or income verification for current holders of an FHA mortgage.

🏡 Best for FHA Homeowners Who:

• ✔ Want an easier process and automatic approval for lower interest rates
• ✔ Have been up-to-date with mortgage payments for 12 months
• ✔ Wish to expedite and simplify the refinancing process

💡 Example:

• If a homeowner has an FHA loan of 6.75%, they can refinance it to 5.25%.
• They will also not need additional income verification to reduce their monthly payments significantly.

⚠ Key Considerations:

• No cash-out option is available
• Mortgage insurance premium (MIP) is required.

🔗 Learn More: FHA Streamline Refinance Guide

VA Streamline Refinance (IRL) (For VA Loan Holders Only)

• The VA Interest Rate Reduction Refinance Loan (IRL), or VA Streamline Refinance, is available to qualified veterans and active-duty service members.
• It allows them to refinance their VA loans with little documentation and no appraisal required.

📌 Ideal For Holders of a VA Loan Who:

• ✔ Want to lower interest rates and monthly payments
• ✔ Prefer no out-of-pocket costs for closing
• ✔ Have remained current on a VA mortgage

💡 Sample Cases:

• A veteran refinances a VA loan from 5.5% to 4.25%
• Savings per month: $250-$400

⚠ Important Notes:

• Availability of no cash-out option
• Exclusively for holders of a VA loan

🔗 Read More: VA IRL Refinance Guide

USDA Streamline Refinance (For Holders of a USDA Loan Only)

• The USDA streamline allows homeowners with an existing USDA rural home loan to refinance without a new appraisal or credit check.

📌 Ideal For Homeowners Who:  

• ✔ Reside in remote locations and already have a USDA loan.
• ✔ Are looking to lower monthly mortgage payments without using income verification.
• ✔ Have been on time paying the mortgage for the last 12 months.

⚠ What To Keep In Mind: Infinity

• There is no cash-out refinance option.
• We already need to hold a USDA loan.

🔗 Find Out More: Guide to USDA Streamline Refinance  

USDA Streamline Refinance Guide.  

How Best To Choose Refinancing Options  

• ✅ Looking for lower rates and payments? → Rate-and-Term Refinance
• ✅ Looking to get cash for paying off debt or for renovations? → Cash-Out Refinance

Have an existing FHA, VA, or USDA loan? → Government streamline refinance.  

• ✅ Want to reduce the length of the loan? →15-Year Mortgage Refinance

Mortgage Loan Refinancing Criteria  

🔹Credit Tier:  

• Conventional loans: 620 and above.
• FHA loans: 500 with 10 percent down.
• VA Loans: VA does not require a minimum score.
• USDA Loans: Preferred 580 and above.

🔹 Debt-To-Income Ratio (DTI):  

• Conventional: 45% to 50%.
• FHA: 50 to 57 percent.
• VA: 41% to 50%.
• USDA: Maximum 41%.

🔹 Required Home Equity:  

• Rate and Term Refinance: Minimum 5 percent equity.
• Cash-out Refinance: Minimum 20 equity.
• Streamlined Refinance: There are no equity requirements

Most Asked Questions Regarding Refinancing  

Can I refinance my mortgage at any time?  

• Most lenders require a minimum of 6 months of timely payments before allowing refinancing.
• FHA and VA streamline refinances may be allowed earlier.

Will my credit score be impacted if I refinance?

• Your credit score might decline slightly because of the credit check, but it tends to bounce back quickly.

If my home value has lessened, can I still refinance?

• FHA, VA, and USDA streamline refinance options and do not need an appraisal.

Who qualifies for the worst refinance loan due to poor credit?  

• Homeowners with low credit scores get the worst refinance loans through FHA and VA streamline refinances.

How much does refinance cost?  

• The closing costs associated with refinancing typically fall between 2% to 5% of the loan amount.
• Still, costs can also be added to the loan for VA and FHA streamlined refinances.

Is it suitable for you to refinance?

• Refinancing can save homeowners money, decrease monthly payments, increase repayment periods, or make them available for home equity funds.
• The various types of mortgage refinance loans available are meant to cater to specific goals, types of loans, or the borrower’s financial needs.

🔗 Looking for an easy refinancing estimate?

Calculate your mortgage here at the Best Mortgage Calculator Powered by Gustan Cho Associates:

👉 https://gustancho.com/mortgage-calculator

📌 Talk to a lender now and get step-by-step tips on refinancing.