The HARP program (Home Affordable Refinance Program) has been around since 2009, but the majority of underwater homeowners were unable to qualify. Restrictions placed on the loan to value ratio ruled out the majority of the 11 MILLION plus homeowners who were underwater on their mortgages.
Recently, the guidelines were changed and should be of great help to homeowners who are upside down on their mortgages. This has been dubbed HARP 2.0. The program is set to run until December of 2013.
What changed and who can qualify?
The biggest change with the HARP program 2.0 is that the limitations on equity have been removed! It does not matter how far upside down your mortgage is, you can now take advantage of historically low interest rates with a HARP refinance. No home appraisal is needed to qualify. This is, of course, assuming you are current on your mortgage payments. The HARP program is only available to those who are current (and some other stipulations below), so if you have missed a payment you need to consider a loan modification.
UPDATE – The LTV cap being lifted is not altogether set in stone yet. While the government has stated this is the new goal of the HARP program, there is one thing you have to think about… What are the investors of these loans saying about this? What is Wall Street saying about this? These are people who own these loans, in most cases it is not your lender.
That being said, I highly doubt that every person with a high LTV will fit into these guidelines and qualify for HARP. I believe a cap of somewhere around 125% – 150% LTV is going to exist for the 1st mortgage note, while some people may be able to get qualified a little higher LTV from different lenders. So basically, those homeowners whose mortgage balance is twice what the home is worth may not qualify.
What caused this belief? After reading my own post, I thought “this sounds too good to be true.” When something sounds too good to be true, it usually is.
Just look at the governments program for loan modifications and see how that turned out…not exactly helping everyone. More like a select few.
Will there be a “feeling out period” when these HARP guidelines are released in a few days time? DEFINITELY.
We will just have to see how this all plays out, but I’m betting that homeowners who owe $300,000 and their home is worth $150,000 are going to have a real tough time qualifying for this program.
Homeowners with a second mortgage may also qualify under this program as well.
There are some restrictions, not all homeowners will qualify however.
- Your loan must have originated on or before June 1, 2009.
- You must be CURRENT on your mortgage! No late payments in the past 6 months and only one late allowed within the last year. If you are late on your mortgage, you must consider a loan modification.
- You must be employed or have income coming in each month
- Your mortgage must be owned by either Fannie Mae or Freddie Mac to participate in the HARP refinance program. You can ask your lender who owns your mortgage or visit:
What happens if I meet the criteria?
Good news! You can speak to a lender about qualifying for the HARP program!
For those homeowners who are current on their mortgage payments, but have lost equity like so many of us in recent years, their is finally hope. Without limitations on equity (previously it was 125% LTV), many homeowners have the ability to refinance their interest rates down to current levels. This can save homeowners hundreds of dollars per month, depending their loan balances.
Over the course of the loan, thousands of dollars in interest savings can be accumulated as well.
Any downsides to the HARP Program?
For obvious reasons, you cannot “pull out cash” with this refinance. However: If you have an interest rate that is higher than current rates, it is now possible to refinance your rate to the current level if you qualify.
While this program will not reduce your principal balance, it still offers great benefits to homeowners. Being stuck in a home with zero equity is bad, but being stuck in a home with zero equity and a 7% interest rate is much worse! Being able to lock in an interest rate in the 3%-4% range will give homeowners a much more secure feeling while at the same time saving them money each month.
All those homeowners who have stayed in their homes, weathered the storm and kept making their mortgage payments on time will now be able to lock in low interest rates… Just as their new neighbors have been able to do the last couple of years.
For homeowners who are late on their payments, there are still several alternatives.
While you do not meet the qualifications for the HARP program to refinance, you still have several options. There are loan modification programs the you may still be eligible to qualify for, which can also lower your interest rates.
There are government short sale programs, in which you may receive compensation from your lender for help with moving expenses,etc. This can be up to $3,000. This may be a good option if you are facing foreclosure, as a short sale is less of a credit ding than a foreclosure.
There are many other options as well. If you are faced with this situation, it is best to contact a real estate attorney, your tax advisor, etc. for professional, legal advice and the best course of action.
To get a free HARP 2.0 refinance rate quote, just fill out this form below!
Our partner will input your data into a state of the art system, finding out which lenders will approve your for HARP 2.0 with the lowest interest rates and closing costs! Then, you pick the best one!