Refinance Your Underwater Home with HARP 2.0

If you are one of the many homeowners unable to obtain traditional refinancing due to property decline, you may be eligible for Making Home Affordable’s Home Affordable Refinancing Program (HARP). HARP is a federal mortgage refinancing program announced through the Obama Administration last year. The program is to allow borrowers who are underwater on their homes or who have little equity to refinance at current low interest rates. There is no cap on LTV (loan-to-value) for current fixed rate mortgages. Meaning, homeowners would be able to refinance through HARP even if you owe twice or three times more than the value of your home.

HARP 2.0 is the second version that is due to roll out mid-March to allow for better streamlining, relaxed credit score and income requirements, remove former challenges to widespread participation by lenders and severely underwater borrowers. Although it is uncertain to know how the new version of HARP will be implemented by individual lenders. There is an estimated 6.9 million loans that could fit the refinancing requirement. Although, there are some criteria you must meet in order to qualify for HARP. Here are some key eligibility requirements:

    • Your loan must be owned or guaranteed by Fannie Mae or Freddie Mac. You can look up your loan here: Fannie Mae or Freddie Mac. Unfortunately, loans owned by FHA, VA or others are not eligible for this program. (I will try to research what is available for other loans not owned by Fannie or Freddie Mac on another post)
    • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
    • The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
    • The current loan-to-value (LTV) ratio must be greater than 80%.
    • The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 6 months preceding the application and no more than one late payment within the past 12 months.

So if you feel you fit the HARP criteria, contact your lender on how to proceed as well as other participating lenders to compare rates. HARP is available until December 2013, so you shouldn’t delay. And for homeowners who have been late on their mortgage, there’s still time to show current payments for 6 months.

Although, there are some negative feelings from homeowners who have already lost their home to foreclosure and I totally understand. Why couldn’t a program come out like this prior to many homeowners becoming in default on their mortgage? Could it have lesson the blow and the foreclosure rate, perhaps? But, with government, nothing gets done quickly.

I will be submitting my application for HARP in mid-March. I’ve been researching what options were available to take advantage of current low interest rates and lower our mortgage payment but had no option to refinance until now. So, to those who are looking for some sort of relief on their mortgage, HARP 2.0 may be the way to go. Be patient as I’m sure with any loan, and dealing with banks, there may be some challenges or obstacles that may happen during the process. I anticipate a long process given the amount of potential homeowners that fit this criteria. I will keep you posted on my experience during the process.

For the other homeowners searching for options to refinance but your mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac, FHA Short Refinance might be another option. Check out more information on FHA Short Refi program on my other post.

If you have any questions about HARP or anything else, please feel free to contact me or send me a comment.


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