HARP 2 Refinance Program for Underwater Homeowners
Update 4/15/2013: HARP 2.0 has been extended, and is now set to expire December 31, 2015. That is an additional two years for the HARP program from the original institution.
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The government announced a couple of weeks ago that they will be expanding the HARP program for homeowners who owe more on their mortgage than their home is worth. This page will answer all the questions about how this program works.
So, if you are underwater on your mortgage, then read on to make sure that you qualify for a refinance of your mortgage, without the need to pay down principle and without needing mortgage insurance.
What is HARP?
HARP is a program that began in April 2009 to help underwater homeowners. HARP stands for Home Affordable Refinance Program – and depending on the agency or lender, it also goes by the names: Making Home Affordable, Refinance Plus, Relief Refinance, and sometimes the Obama refinance program.
All terms are synonymous with HARP.
In order to qualify for this program, you must:
- Have a current loan that is owned by Fannie Mae or Freddie Mac.
- Your current mortgage must have been closed before June 1, 2009
Q & A on the New HARP 2.0 Refinance Program
Now that I checked and know my loan is owned by Fannie or Freddie, am I automatically eligible for HARP?
No. That is just the prerequisite. There are further HARP qualifications.
- You have to be current on your mortgage with no mortgage late payments for the past 6 months, and can only have 1 30 day late payment in the past 12 months.
- You have to qualify based on credit and income, just like with a traditional refinance.
Do I Need an Appraisal with the HARP Refinance Program?
No. Well, maybe not. Update: Thus far we are getting appraisal waivers about 80% of the time, roughly. Probably better than anyone expected would be the case.
Under the original program the loans were limited to 125% of the value of your home. That is why a lot of homeowners could not take advantage of the program, because they were further upside down than that.
HARP 2.0 replaces the obligatory appraisal with a computerized model of your home value, called an Automated Valuation Model (AVM). So, whether you owe 95% or 175% of the current value of your home, you will be able to refinance to a lower rate.
What if My Loan is Not Owned by Fannie Mae or Freddie Mac?
Do I Need to Go to My Current Lender to Refinance under HARP?
No, any participating lender can help you refinance your home. I will be happy to help.
I Don’t Have Mortgage Insurance (PMI) Now on My Home; Will I Need PMI with the HARP Program?
No. If your current loan does not have Mortgage Insurance, you will not have PMI on your new HARP Program Refinance either.
On the other hand, if you currently have Mortgage Insurance on your loan, then you may still be able to refinance under the HARP refinance program, but your lender will have to get the MI to be re-issued. So, it may take a little extra time to process the loan and get your loan closed. If you have PMI, then make note of that up front at loan application.
What is the Largest Loan amount I can get with the HARP Program?
This is a conforming loan, which has upper limits of $417,000 in most areas. In some counties the conforming limit is higher, such as Greene County Georgia has a loan limit of $515,200.
If your current loan is larger that that, then you do not have a Fannie or Freddie loan. It is a Jumbo loan. My team can help you refinance your Atlanta Jumbo Loan, but not under this program.
Can I do a cash-out refinance with the HARP Refinance Program?
No. The HARP refinance program does not allow for cash out refinances. Only ‘rate and term’ refinances, to lower the rate or shorten the term of the loan.
Are There Closing Costs with HARP Refinances?
Yes, there are closing costs just the same as with any conventional mortgage. I suggest that you get a quote with No Points/No Origination fee, to keep costs down. And, with Freddie Mac you can roll in closing costs and escrows up to 4% of the loan amount or $5000, whichever is lesser. Fannie Mae has no limit.
You can read more about HARP loan closing costs here.
Can I refinance Investment Properties with the HARP Refinance Program?
Yes. So long as the loan is owned by Fannie Mae or Freddie Mac, you can refinance an investment property or a second home with this program. Investment properties under HARP 2 are allowed up to 105% LTV.
Fannie Mae does have a limit of 10 financed properties. If you have more than 10 properties with mortgages, then you will not be eligible for HARP; unless you are able to pay off some mortgage loans in order to qualify.
Similarly, Freddie Mac has a limit of 4 financed properties. If you have more than 4 and Freddie Mac owns the loan, then you will not be eligible for HARP.
Can I Roll My Second Mortgage or Home Equity Line into the new First Mortgage with HARP?
No. You cannot combine a first and second loan with HARP. This program is for first mortgage liens only. We will need to ‘re-subordinate’ your second mortgage to the new first mortgage. Most lenders are charging a fee for the re-subordination process.
What are the HARP Refinance Program’s Interest Rates?
Mortgage Rates for the original HARP program were slightly higher than the going rate for traditional mortgages. We are told that under HARP 2.0 the rates will be the same as with traditional mortgage loans.
There are, of course, ‘loan level pricing adjustments’ for credit score and property type (investment vs primary residence, etc), just like for traditional mortgages. But, there will be no adjustments for Loan-to-Value.
How many homeowners does this affect?
A lot. Mortgage refinance applications were up in the last quarter by more than 20% nationally, led by HARP applications. Find out the numbers for several states in the Southeast
will the harp refinance negatively affect my credit?
How long will the HARP Refinance Program be available?
The HARP Program is available for loans that were closed prior to June 1, 2009, until the program ends on December 31, 2015.
Once we take an application and get automated approval (which is very quick) then we are taking about 30 days to close the HARP 2 refinance. If your loan is HARP-eligible, then I suggest you take advantage early, since interest rates are at such lows right now, and we know that mortgage rates change every day.
Click here to use the form to get a rate quote. There is no fee for applying, and I will be happy to get a rate quote for you.
Finally, the HARP Refinance Program is not intended to help stave off foreclosures. It is for homeowners who are current on their mortgage loans. If you are currently facing foreclosure, call your current loan servicer right away to try to work something out.
Where Does the Property Need to be located?
Well, that does not matter for HARP 2 – anywhere in the US. That said, I lend in 40 States: Georgia, of course, Alabama, Arizona, California, Connecticut, Colorado, Delaware, Florida, Georgia, Idaho,Illinois, Indiana, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington and Wisconson. If your loan is outside this area, let me know and I will put you in touch with a very qualified lender in your area. I network with a superb group of loan officers and lenders around the country, and can put you in touch with one in most areas.
Just drop me an email at jim(at)MortgageLenderAtlanta.com, with the subject line “HARP 2 in (State)”.
I look forward to helping you take advantage of these low rates with the HARP 2 program.