Are You Eligible For A HARP 2.0 Refinance?

More than 10 million households are “under water” with their mortgages, according to one recent estimate. The HARP 2.0 refinance program is one of the few mortgage products currently available that can offer some relief to eligible borrowers who are currently holding their breath, waiting for home values to rise to previous levels.

The phenomenon of being stuck with a mortgage that is worth more than the market value of one’s home can be a depressing one for many home owners.
Despite the attractive low levels of current interest terms, under water home owners find themselves unable to refinance. Since the financial crisis of 2007-08, home values fell up to 25% in some areas. The choice is either to continue paying on a loan that exceeds the value of the house, which some people believe is “throwing good money after bad.” Some owners make the questionable decision to walk away from the property altogether-damaging their credit and the local housing market at the same time.

Although HARP 2.0 is clearly meant to solve a problem for many home owners, the program is not for distressed borrowers. To qualify for HARP 2.0, the mortgage must be a “conforming” loan of $417,000 in most areas, although in some high-cost areas the limit is boosted to $625,500. (Conforming means the loan follows the guidelines of Fannie Mae and Freddie Mac, and in most cases, those giant housing finance agencies will own the mortgage, having purchased it from the original lender.) The loan-to-value ratio (LTV) must be over 80%; in most cases, that means that home owners made down payments of 20%. And the loan must have been taken on or before June 1, 2009. To find out if your loan is owned by Fannie Mae or Freddie Mac, click on the links.

In addition, homeowners must have reasonably clean payment histories, with no late payments in the previous six months and not more than one late payment in the past year. Further, borrowers can’t use HARP 2.0 to refinance a HARP 1 loan – unless that loan was guaranteed or purchased by Fannie Mae or Freddie Mac between March and May 2009.

Home owners pursuing HARP 2.0 refinancing need to be resourceful. Not all banks offer the program. Even if you qualify and find a lender, home owners may be turned down at their first try. The consensus among experts is to continue pursuing the HARP 2.0 refinance with a different lender or lenders. Banks have different criteria, and being turned down by one bank is not a sign that HARP 2 is unavailable to you.


Refinancing With HARP 2.0: Frequently Asked Questions

What is HARP 2.0?
The Home Affordable Refinance Program (HARP) is a revised version of a federal home loan program that allows home owners to refinance their loans for amounts higher than the current market value of their homes.

Why would the federal government offer this type of loan?
The government wants to provide mortgages to people who are otherwise unable to refinance their properties, due to the sharp drop in home values in recent years. Many home owners who are “underwater” with their properties may have few other good options.

In what ways is HARP 2.0 an improvement over the original HARP?
The original HARP program refinanced properties up to 125% of the loan-to-value (LTV). The current version allows home owners to finance even higher percentages. Also, some fees and restrictions in the earlier program were modified or removed.

What kinds of loans are eligible for a HARP 2.0 refinance?
The loans must be owned by Fannie Mae or Freddie Mac, and must have been sold to those agencies on or before May 31, 2009.

Do I have to pay more in interest for a HARP 2.0 than other loans?
No, home owners are free to choose among competing mortgage lenders for the best possible rates.

What types of mortgages can be refinanced through HARP 2.0?
Many kinds, including 30-year fixed rate loans, 15-year fixed rate loans, and 5/1 ARMs (adjustable loans).

Is there a minimum LTV to qualify for HARP 2.0?
To be eligible, borrowers must have a mortgage with an LTV of at least 80%.

How popular is HARP 2.0 currently?
Very popular. In the first quarter of 2012, there were 180,185 loans refinanced with HARP 2.0, nearly double the level of the previous quarter.

Do I need to be current on my mortgage to qualify for HARP 2.0?

If I’ve been late in a mortgage payment, do I still qualify?
Borrowers are allowed one late payment in the past 12 months, as long as the late payment did not occur in the past six months.

Do I need to get a new appraisal for the HARP 2.0?
In many cases, Fannie Mae and Freddie Mac can provide automated valuation model (AVM) estimates.

How long will HARP 2.0 loans be available?
The program is in effect until December 31. 2013.

For further information regarding HARP 2.0 program, please contact us @ 858-750-0931 or complete the form below and submit your request on line.  “By Ed Eissa”