Originally announced in March 2009, HARP is a federal government program designed to help millions of underwater or near-underwater homeowners refinance into a fixed loan with a lower monthly payment.
When the program was first rolled out, not many borrowers were able to take advantage of the program. In October of 2011, the government announced an overhaul to the HARP program with the intent of reaching more homeowners who couldn’t qualify originally. The expanded HARP program – now referred to as HARP 2.0 – will reach more and more homeowners in need; one to five million loans are expected to be refinanced with this newly revamped program.
HOW IT WORKS:
You are only eligible if your current loan was bought by Fannie Mae or Freddie Mac prior to May 31, 2009 – we can help you determine this.
You will need to show that you have been current on your mortgage payments – you may have one 30-day late payment in the past 12 months, but none within the past 6 months.
There are no loan-to-value restrictions or limits this time. As the most significant change in the revamped program, loans that qualify under HARP 2.0 no longer have LTV and CLTV restrictions. This means no matter what the current value of your home is, you may still be eligible to refinance into a fixed rate term. Guidelines for ARMs are a little tighter for HARP 2.0 and are limited to 105% loan-to-value. (Loan to Value ratio expresses the amount of a first mortgage lien as a percentage of the total appraised value of real property.)
Appraisals work a little differently with this program– It will be determined who needs an appraisal based on several factors, and some borrowers will qualify without an appraisal at all. The necessary documents required will be determined on a case-by-case basis.
HARP 2.0 is available through 2013, so even if you don’t qualify now—if you had a late payment in the last six months, for example—there’s still time to get back on track to qualify and take advantage of this great program.
The point of HARP 2.0 is to help struggling, underwater homeowners or simply to assist borrowers who wanted to refinance into a lower rate but couldn’t qualify under previous guidelines. With this program you will be able to refinance into a better rate, reduce your mortgage payments, pay down your loan balance and rebuild your equity.