As of August 31, 2011, nearly 894,000 borrowers have refinanced through HARP.

Here’s how to qualify for a HARP loan refinance:

1. You must be an owner occupant of a 1 to 4 unit property

This means that you (the homeowner) must live in the property that you are trying to refinance to qualify for HARP.  The property must be either a condo, single family home, duplex, triplex, or 4 unit home.

2.  Your mortgage payments must be up to date

You are not eligible if you have been late on your mortgage payments by over than 30 days or if you’ve skipped any  payments entirely in the past 12 months.

3.  You must owe at least 80% of your mortgage

Your loan to value (LTV) ratio must be above 80%

For example, if your house is worth $100,000 and you only owe $20,000 – you do not qualify.

For example, if your house is worth $100,000 and you owe $81,000 or more – you do qualify.

4.  You must have a Fannie Mae or Freddie Mac loan

According to Zillow - about 60% of homeowners in the USA have loans backed by Fannie Mae and Freddie Mac.  The mortgage must have been sold to Fannie and Freddie on or before May 31, 2009.

You can find out if you have a Fannie Mae or Freddie Mac loan here:

http://www.FannieMae.com/loanlookup/       or calling  1-800-7-FANNIE      (8 am to 8 pm ET)

https://ww3.FreddieMac.com/corporate/       or calling  1-800-FREDDIE       (8 am to 8 pm ET)

5.  When is the deadline?

The end date for the HARP program has been extended until December 31, 2013

It’s a long process and it totally sucks for all parties involved. I’ve done quite a few evictions now and believe me they do not get any easier.

In both examples you control the property/business using OPM (other people’s money) and don’t have to personally take the risk. With these techniques, a buyer can control a business or property with usually just a small non-refundable deposit given to the seller. My team specializes in negotiating the terms between buyer and seller using creative financing techniques.

The pre-approval letter is based on your individual needs and debt to income ratio. Think of it like going to the doctor. You wouldn’t go to the doctor’s office without your insurance card. In the same sense, you shouldn’t be looking at houses without the pre-approval. While there are many kinds of home loans, I will cover the basics of the most common ones.

FHA Loans
This is the most common type of financing. The downpayment is typically smaller than a conventional mortgage. FHA loans are insured by the government and require the borrower to live in the property.

VA Loans
VA Loans are backed by the U.S. Dept of Veterans Affairs. This type of loan is available to active and inactive people in the military as well as their spouses. A veteran can often get a VA Loan with little or no downpayment.

USDA Rural Development Guaranteed Housing Loan
This type of home loan is backed by the U.S. Dept of Agriculture. It is available to people who are buying a home in a rural area that is designated as a “Rural Development Area”. These loans can typically be obtained with minimal closing costs and no downpayment.

Conventional Mortgage
This type of mortgage is not backed by any government agency. It usually requires the borrower to have a larger downpayment and superb credit history. Conventional mortgages can have better interest rates than FHA loans. Most conventional loans require a downpayment between 5% and 20% of the sales price.

Fixed Rate Mortgages
With a fixed rate mortgage, the monthly payments remain the same for the life of the loan. Most fixed rate mortgages are for 15 or 30 years. This loan is completely amortized and is paid off in full after the life of the loan.

Adjustable Rate Mortgage (ARM)
An adjustable rate mortgage is the opposite of a fixed rate mortgage. With an ARM, the monthly payment fluctuates (rather than remaining constant). Both the principle and the interest rate adjust with the current market rates. While an ARM may initially provide the borrower with a better rate than the fixed rate mortgage, it can be very risky when the rate adjusts higher (this causes the monthly payment to increase).

Home Equity Loan
A home equity loan is used by existing homeowners who want to “pull money out of the house”. A home equity line of credit (HELOC) is a type of revolving credit based on the appraised value of the home. The money that is taken out can be used for anything. This is often in addition to a 1st mortgage.

Refinance
Like a home equity loan, this is done once a person already owns a home. When you refinance your mortgage, you’re replacing it with a new loan. The refinance is great for someone with an ARM because they can get their monthly payment lowered and lock in a new fixed rate.

Reverse Mortgage
Reverse mortgages are suitable for anyone over the age of 62 who has equity in their house. Instead of the home owner making payments to the lender, the lender is making payments to the homeowner. (Sort of like an annuity payment). However, by doing so, the home owner agrees to give the house to the bank upon their death. This is a good exit strategy for seniors who do not have heirs to inherit the house after they pass away.

An ARM is a type of mortgage where the rate is not fixed (it fluctuates).  When an ARM resets,  the rate usually goes higher.  For example, Jim has been paying a 6% interest rate for the past 5 years on his $115,000 home when his rate resets and jumps to 18%.  Jim can no longer afford his monthly mortgage payment.  Due to Jim being a “subprime borrower” – Jim cannot refinance his mortgage to today’s actual lower interest rate.  Jim can’t make the payments on his home and eventually the bank forecloses it. 

The bank lists Jim’s foreclosed house for sale for $60,000.  Sylvestor the Investor buys the home from the bank for $50,000.  Sylvestor just got a sweet deal on a house for less than half of it’s market value.  This is great news for Sylvestor, but bad news for Jim. 

The easy solution seems that the banks should just allow the people with the  ARMs to refinance to today’s actual lower rates.  The United States is going to experience a lot more scenarios like this in 2011.  This is great news for investors and anyone looking to buy their own cheap home to live in.

This is a great article on real estate investing based on the opinions of 500 investors by Diane Kennedy.   You can read it at her website here:     http://tinyurl.com/2coz8sp

Over 500 people agreed to take an hour out of their Saturday this past weekend to talk about real estate today. We’re working out a few kinks right now and should have the video of the webinar up on the Insider’s Club by mid-week.

Here are some of the ah-ha’s that I had from the webinar with Matt Bowles:

• One of the mistakes that people are making in this market is trying to stick to the do-it-yourself model. It might have been necessary to trade work to build equity in the old real estate boom, but not anymore. There are cash-flowing properties all over the place.
• Just because there are deals, doesn’t mean every place is a deal. Most deals won’t be in your backyard.
• If you want passive income, concentrate on a market with 40% or more renters.
• Pay attention to the subdivisions you buy into. Is the HOA solvent?
• There are two strategies for cash flow investing: Investing in cashflow-advantaged markets and Investing in tax-advantaged markets. Make sure you know which one is right for you.
• Many of the big investor pools are concentrating on single family residences, rather than multi-units.
• The general plan from many big investors is to come in and buy now, cash flow for 5-7 years and then liquidate.
• You can never sell at the absolute top and buy at the absolute bottom. But, you can get the general trend to boost your investment.

Make sure you check out the Insider’s Club later this week to go through this highly energetic presentation. We had to finally cut it off, even though there were over 40 questions still left.

If other banks follow suit, a nationwide moratorium could destroy an already weak housing market causing it to further collapse.  Buyers of foreclosure properties will be delayed until further notice and may not get to close on their contract date.  Wells Fargo has already announced that it has no plans to suspend foreclosures because they are in compliance with their daily auditing.

According to Trulia – The median sales price for homes in Pittsburgh PA for June 2010 to August 2010 was $128,000.  This represents an increase of 6.7%, or $8,000, compared to the prior quarter and an increase of 2.4% compared to the prior year. Sales prices have appreciated 6.7% over the last 5 years in Pittsburgh.

The most popular neighborhoods for buying include:   Mount Lebanon, Shadyside, Southside Flats, Brighton Heights, Southside Slopes, and Highland Park.

  Mortgage rates fell to an all time low this past week.    According to Reuters, the 30 year fixed loan rate has fallen to a historical low since Freddie Mac began tracking back in 1971.  Refinancing is at its highest level since May 2009