The issuance of mortgages to potential homeowners at some point turned out to be one of the bank’s main sources of income. They began to compete for the attention of future borrowers, offering favorable rates and lower requirements. Moreover, this situation has developed in the HARP sector, which could not fail to attract the attention of mortgage borrowers. But when calculating the benefits, few people remember the negative aspects of HARP loans.
When you issue HARP loans, you are essentially taking out a new loan. So, it’s time to remember how easy your first loan was issued. You will have to collect the full package of documents again, and it may differ according to the requirements of the new bank. You will have to visit this department several times again, and possibly the current lender. It is also necessary to re-examine the terms of the proposed agreement. Assessment, insurance, all these stages are necessary to undergo.
HARP loan – risk for a new bank
Therefore, they will check you more thoroughly. Particular attention will be paid to how you paid off your current mortgage. And if you came to refinance it already with delays, most likely you will be refused. Your income will play an equally important role. If your income has decreased during the repayment term, the result of processing your application may also be negative.
These are additional costs
Remember this is a new mortgage loan? This means that your expenses will be no less during registration. You will have to pay all over again except for the registration of ownership. You may need to hire a new insurer if your old one is not accredited with the bank where you intend to refinance your mortgage. Also, check with your current lender if they impose any additional fees on those who are going to pay off the mortgage ahead of schedule.
These are additional obstacles
Your current bank will know that you are about to leave it. And not just repay the loan ahead of schedule, but let a competitor earn it. And, of course, he will object your leaving. The network is full of stories about how unscrupulous creditors distort the data transmitted to the credit bureau. Or they even share confidential information with third parties, and in the process of processing your application, a new potential lender will not understand the reliability of the information received.
Additional consent may be required
If your transaction initially assumed the presence of a co-borrower or guarantor, it is highly likely that the new bank will also require similar additional collateral. Especially if the amount of debt you paid during this time is small. And then you will have to negotiate with your guarantors about their participation in the new loan. Or look for a new surety.