“Homes that are under water have only a few option to refinance their mortgages, the HARP programs is probably your best bet but it’s not for everyone and there are restrictions.”
THE Home Affordable Refinance Program expansion helps today’s historically low rates become available to customers who have an existing mortgage loan owned by Fannie Mae and Freddie Mac.
There is a little twist to the new guidelines that might get you in the door of refinancing to historic low rates in the 3’s if you have not done so. Homes that are under water have only a few option to refinance their mortgages, the HARP programs is probably your best bet but it’s not for everyone and there are restrictions.
What has changed for Fannie Mae Harp programs is that they will now allow a 150 percent/175 percent loan to value or combine loan to value on primary and secondary residences. Let me cite some example that will easily relate to some of you: Assuming you have a current mortgage balance of $400,000 on your existing one or two combined mortgages. If you current market value of your owner occupied property is around $275,000, you will get a chance to refinance to the current low interest rate with this HARP Program. Here are some of the guidelines that you have to qualify for:
– 660 minimum Fico for Owner Occupied. – 680 min Fico for Second homes.
– Standard Conforming loan amount are eligible, loans under $417,000.00.
– No mortgage lates the previous 12 months.
– Maximum debt to income ratio not to exceed 45 percent.
– Current mortgage must be a Fannie Mae owned loan (www.fanniemae.com/loanlookup) and the DU refi plus special feature code 147 must be in the finding results (ask your lender about this condition).
– Loans with PMI by MGIC, Radian & Genworth will also be able to retain existing payments.
– Investment properties are eligible on Refi Plus 1 programs.
Some Q & A about the HARP refis
Fannie/Freddie does not hold my mortgage. Now what do I do?
Call your existing lender and ask if they have any internal program to help homeowners that are underwater or try to get a loan modification for a lower rate. Lenders will accept loan mods now without any mortgage late.
My mortgage is backed by Wells Fargo. Am I eligible for HARP?
It’s possible that your mortgage is backed by Wells Fargo, but the more likely answer is that Wells Fargo is just your mortgage servicer; the bank that collects your payments. Wells Fargo backs very few of its own loans. Most loans for which payments are sent to Wells Fargo are backed by either Fannie Mae or Freddie Mac. Double-check with Fannie Mae and Freddie Mac before assuming Wells Fargo backs your loan. Same goes with all major banks like BOA, Citi and Chase.
I have a jumbo mortgage. Can I use HARP 2.0?
No, HARP 2.0 is not meant for jumbo mortgages. It’s for mortgages backed by Fannie Mae or Freddie Mac only. There is talk of a HARP 3 program. HARP 3 would likely include loan types not covered by today’s program guidelines. You can read more about HARP 3.
What is HARP 3?
HARP 3 is the next iteration of HARP. It’s currently in talks in Congress. There is no expectation for when, or if, it will be passed. HARP 3 is rumored to include all of the loan types and borrowers who are specifically excluded from HARP 2. You can read more about HARP 3.
My bank sent me a HARP rate quote. It looks like a high interest rate. Should I shop it around?
Yes, you should always shop HARP mortgage rates because they vary so widely from bank-to-bank. You may save a lot of money just by getting a second opinion. Harp is just a vehicle lenders/brokers use therefore, do shop around and you should try and get a True No Cost Refi Loan.
Will the Home Affordable Refinance Program help me avoid foreclosure?
No. The Home Affordable Refinance Program is not designed to delay, or stop, foreclosures. It’s meant to give homeowners who are current on their mortgages, and who have lost home equity, a chance to refinance at today’s low mortgage rates.
What are the minimum requirements to be HARP-eligible?
First, your home loan must be paid on time for the prior 6 months, and at least 11 of the most recent 12 months. Second, your mortgage must have been sold to Fannie or Freddie prior to June 1, 2009. And, third, you may not have used the program before — only one HARP refinance per mortgage is allowed.
Will HARP 2.0 “forgive” my mortgage balance?
No, HARP does not forgive your mortgage balance, nor does it reduce your principal owed. HARP refinances your current loan balance only. It is the same as any other refinance.
You keep saying LTV doesn’t matter, but my bank turned me down for HARP because my loan-to-value was too high.
That’s normal, actually. Not every bank will underwrite HARP loans to the letter of the guidelines. Loans with high LTVs can be risky to a bank. Therefore, some banks will limit their business to loans under 125% loan-to-value, for example. Remember — just because one bank turned you down doesn’t mean that every bank will. Apply somewhere else to get a second option.
Is HARP the same thing as an FHA Streamline Refinance?
No, the HARP mortgage program is administered through Fannie Mae and Freddie Mac. FHA Streamline Refinances are performed through the FHA. The programs have similarities, however.
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Thanks for the inquiry; this is a very HOT topic now. Please call for your further info on this issue, call Ken Go of 1st Innovative Finance Group at (562) 697-7028 or write to [email protected].
