HARP (Home Affordable Refinance Program) has served as a great financial relief tool for 2.5 million American households since its launch in 2009. Though many feared that Congress would let the program lapse, HARP 2.0 was extended through 2015 and has provided refinance relief to nearly 80,000 households in 2013.
Though HARP has been helping out millions of American households, due to its eligibility requirements, only about 21 percent of home refinancing has been done using HARP 2.0. The most important requirements are that your current loan must be backed by Fannie Mae or Freddie Mac, and must have been securitized before May 31, 2009. Remember, even if you make mortgage payments to a different lender, your mortgage could still be securitized by the government. If you do have a Fannie or Freddie loan, here are a few other things to make sure of.
· You must be current with your mortgage payments, with no more than one missed payment in the last 12 months.
· You cannot have previously refinanced under HARP. Most homeowners will have refinanced with earlier rates anyway, but if you’re still trying to secure a sub-4 percent rate, you can act now.
· Your Loan-to-Value (LTV) must be greater than 80 percent.
· FHA loans, Jumbo loans, USDA mortgages and most other mortgages are not eligible for HARP refinancing, but you should always ask your lender about your options once you’ve confirmed that Fannie or Freddie hold your mortgage.
Is HARP Right for You?
Refinancing can be a tricky decision at any time, but as mortgage rates continue to rise, homeowners should carefully consider their refinancing options. Your first move should be finding a HARP 2.0 lender like New American Funding, since not all banks are Fannie Mae/Freddie Mac approved to participate in the program. Second, it’s important to carefully do the math to see if paying the closing costs for a refinanced mortgage is worth restructuring your loan. With interest rates now hovering near 4 percent, homeowners who have loans in the 6 – 8 percent range still stand to benefit nicely from a HARP 2.0 refinance.
Although you don’t have to be underwater on your home to take advantage of HARP 2.0, there is no underwater limit to refinance under the program. Your LTV must be greater than 80 percent, but you can refinance even if you are far underwater with your mortgage. You’ll have to find a lender willing to work with you if you have an LTV more than 125 percent, but you are eligible for the program.
How to Take Advantage
First, you should shop around for the best rate among lenders. As stated above, mortgage lenders will all have different criteria for servicing HARP 2.0 refinancing, including offering different interest rates. When refinancing, it’s important to remember that you are allowed to switch lenders, change your mortgage insurance payments and even change the term of your loan from 30 to 15 years if you choose. Carefully discuss your options with your lender and make sure to keep your long-term finances in mind before you make any move.
The HARP 2.0 program has been extended by the Federal Housing Finance Agency through Dec. 31, 2015, but there has been increased discussion about further changes to the program to make it HARP 3.0. It is still definitely under discussion, but the program may be expanded to include homeowners who are not backed by Fannie Mae or Freddie Mac, such as Jumbo Loans or sub-prime borrowers. While HARP 3 is still in the works, homeowners can still find great deals with HARP 2.0.