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Home Affordable Refinance Program HARP Expands Eligibility

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Home LoansWith mortgage rates at record lows, many are interested in refinancing. Indeed, refinancing can improve your monthly cash flow, providing you with extra income as your monthly payments are reduced. A lower interest rate can mean a lower monthly payment, as well as savings of thousands of dollars in interest charges.

However, there are many lenders who won’t refinance homes that are under water. In order to encourage lenders to refinance homes, the government unveiled the Home Affordable Refinance Program (HARP) in 2009. However, some homeowners did not qualify under the program requirements. As a result, in an effort to make the program more accessible, changes were announced to the program.

Expanding the Eligibility Requirements

One of the biggest changes is that the cap on the loan to value ratio has been lifted. In the original requirements, any home that had a loan to value ratio of more than 125% was ineligible. However, now, if you meet other requirements, you might be able to refinance even if you owe more than 125% of the value of your home. This can be helpful for homeowners who live in areas where the home values have plummeted by quite a bit.

Before, in order to be eligible for HARP, missing a mortgage payment was not allowed. Now, as long as you haven’t missed a payment in the past six months, it won’t disqualify you if you missed a mortgage payment in the last 12 months. The program has been extended through December 31, 2013, and gives time for homeowners to work to meet eligibility requirements for an eventual refinance.

Another change meant to provide advantages to homeowners is the way that fees have been cut for some borrowers. Under old rules, shorter-term loans sometimes carried higher fees than expected. The new rules cut borrower fees so that those wishing to refinance to shorter terms can do so without incurring extra expenses.

Eligibility Requirements for HARP

Not everyone is eligible for HARP, however. In order to qualify, you must have a mortgage owned by or serviced by Fannie Mae or Freddie Mac. Additionally, you must owe at least 80% of the value of your home, and meet the payment requirements. If you have already refinanced using HARP, you won’t be able to get another HARP loan with the program.

As you can see, HARP is designed to help those who wouldn’t normally be able to refinance do so. And, of course, the mortgage payment requirements mean that only those who have been largely responsible in making their payments are eligible. Indeed, the program is aimed at those whose home values have fallen, and those who wish to refinance so that they can improve monthly cash flow.

Realize that it will be a couple more months before lenders can start implementing the new HARP requirements in some cases. Contact your lender to learn whether or not you are eligible, and to find out when the new guidelines will be followed. In the meantime, you can prepare to make yourself as attractive as possible to lenders by improving your credit score, and remaining up to date on your mortgage payments.

(Photo: Jeremy Brooks)

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13 Responses to “Home Affordable Refinance Program HARP Expands Eligibility”

  1. Jeremy says:

    Good luck on finding a lender that knows anything about this though. I spent the better part of my day today talking to nearly half a dozen lenders and have gotten nowhere.

    My own bank that owns the loan tried to run it through HARP and they told me it was getting kicked out of fannie’s underwriting even though it’s a fannie backed loan. Then I went to a few other lenders and even though they participate in HARP their requirements are more strict and wouldn’t do it for more than 95% LTV even though there shouldn’t be a LTV cap.

    Finally, I went to Chase where I’ve been a customer for a decade and their stupid loan person tried telling me they can’t refinance for us because HARP is only available through the lender where the current mortgage is held, which isn’t true. *rolleyes*

    It’s quite ridiculous when you qualify and there is documentation out there to outline everything and it’s nearly impossible to actually find a lender who knows what they are doing or willing to help.

    • Bob says:

      Jeremy – I’ve refi’d twice (primary home and investment prop) using HARP with Quickenloans. They are very familiar with the program and it was the easiest two refi’s that I’ve ever done. I’d recommend checking them out.

      • Rob says:

        Sadly Bob, your experience with Quicken Loans is not the usual experience. They are the most complained about mortgage company in the business.

        • Rob says:

          Jeremy,

          Give it a little bit of time. I am a mortgage banker, we offer the original HARP program with zero issues. We, and all other lenders, are still accessing the secondary market for this product. Even though the “program” is released, it is not finalized. The part that is not finalized is the risk factor that the lenders take on with these loans, as well as the issue with loans that have existing private mortgage insurance. You should see some traction by end of Q1 this year. Or.. you will not see many lenders do it because of the exposed risk that they take on it. All really depends on the issues in the program that are still being worked out.

          • AH says:

            Rob,

            Good to know. What bank are you with? I want to make sure I call your bank when I am ready to take advantage of HARP2 if you said you guys did it without any issues!

          • Rob says:

            Ill gladly update this thread when more information comes out about HAMP2. The hold up right now is the secondary market. Freddie Mac had major issues with HAMP1, which is why so many lenders pulled away from doing Freddie MAC Open Access loans. Freddie Mac was religiously sending these loans back to the lenders, which made major players like Chase, GMAC, Wells, etc all stop doing the Freddie version.

        • RobP343 says:

          I signed up as a user now.. So “Rob” is now me RobP343.

  2. govenar says:

    How do renters sign up to get the free money?

  3. jeanette says:

    We just finished closing with Chase using HARP. It was easy & we saved a considerable amt. of money. FYI, we had PMI so before the refi, we had the property (investment) appraised. It was appraised for enough that we were able to drop the PMI making it possible not to have to carry that into the refi. Oh… we order the appraisal thru Chase so that they would have no issue with the appraiser. Take your time, do your homework & HARP can prove to be a real saver.

  4. Deborah says:

    What if the bank says no and instead wants to do a
    deinlforeclosure. How do you argue that you want to keep your house

  5. Mark says:

    When will mortgages not services by Fannie and Freddie qualify? This is where the majority of our problems lie

  6. camu says:

    I can’t believe I miss the cut-off date (June 1, 2009) by FOUR days, since ours was acquired on June 4 :(


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