This also means that borrowers may not be required to obtain a property appraisal which enables more borrowers to refinance and saves them significant money and time. Additionally, HARP 2. The program's reduced borrower qualification requirements make it ideal for homeowners who cannot refinance using standard mortgage programs. The first step with the HARP 2. There are many HARP 2.
We review program and borrower qualification requirements in detail below. Borrowers who are eligible for the HARP 2. These approved lenders make sure that your loan is eligible and that applicants meet program guidelines and qualify for the program. Even if your current lender offers the HARP 2. The table below shows interest rates and closing costs for refinance lenders in your area.
We recommend that you contact multiple lenders to determine if they offer HARP 2. Compare the loan terms and requirements for HARP 2. Comparing lenders and proposals enables you to find the refinance program that is right for you. We review the key HARP 2. The first step for borrowers is to determine if their mortgage is eligible for the program. To be eligible for HARP 2. Fannie Mae and Freddie Mac are government-sponsored enterprises GSEs that provide capital to and buy mortgages from lenders.
Borrowers do not obtain mortgages directly from Fannie Mae or Freddie Mac but in many cases your mortgage is sold to them and you continue to make your payment to your original lender. The majority of mortgages in the U. So even if you make your monthly payment to Wells Fargo, Chase or Bank of America there is a good chance that your mortgage is actually owned or guaranteed by Fannie Mae or Freddie Mac.
You can use Fannie Mae and Freddie Mac's loan look-up tools to determine if they own or guarantee your loan. Your original mortgage must have closed on or before May 31, To qualify for the program borrowers must be current on their mortgage and not delinquent. Borrowers cannot have any missed or late mortgage payments within the six months prior to applying for the HARP 2.
Under most circumstances you cannot have previously refinanced your mortgage with HARP 2. It is usually impossible to refinance your mortgage if you are underwater on your home. Because the program does not use a maximum LTV ratio, lenders may not require an appraisal report which saves borrowers money and time.
In cases where lenders can access a reliable property value estimate from Fannie Mae or Freddie Mac, called an Automated Valuation Model AMV value, a new appraisal should not be needed. You may be able to roll the fee into your loan or have it eliminated in return for paying a slightly higher interest rate. One of the significant changes in HARP 2. This may not seem important to you, as a borrower, but it makes lenders much more willing to refinance underwater mortgages originated by other lenders.
Many of the mortgages that are now underwater were originated during the housing bubble, when sloppy underwriting practices were common, so this is a particular concern for lenders.
Under the old guidelines, you couldn't get a HARP refinance on a condominium if more than 10 percent of the units were held by a single owner, or if more than 20 percent of the units were behind on their association fees.
With large numbers of unsold and foreclosed bank-owned properties on the market, this blocked many condominium owners from qualifying for HARP. Now, that restriction has been completely removed, opening up the program to many underwater condo owners. Another change is that you no longer have to meet any income requirements to qualify for a HARP 2. You do have to be current on your mortgage payments, as explained above. The new HARP 2. However, some of the provisions were tied to the development of automated underwriting software needed to implement them.
That software became available in March , so those provisions didn't really start to kick in until then. Prior to that, lenders had to manually underwrite HARP 2. The following are things that haven't changed in HARP 2. Under HARP, you're not required to refinance your mortgage with the same lender who's currently servicing it.
However, many lenders, particularly the larger banks, are only doing HARP 2. For this reason, when seeking a HARP refinance it's best to start out by contacting your current mortgage servicer. Smaller lenders seem to be more willing than some of the larger ones to do HARP refinances on mortgages they did not originate. Beyond that, mortgage brokers, who work with multiple lenders, may be useful in helping you identify other lenders who may be willing to take on your loan.
The guidelines described above describe the basic rules for HARP 2. Individual lenders, however, may have their own rules, known as overlays, for the program. For example, HARP has no minimum credit score requirement, but many lenders will require that borrowers have a score of at least before considering them for a HARP refinance. Lenders may also impose loan-to-value restrictions on mortgages they will refinance, even though Fannie and Freddie have no such limit.
Some lenders are imposing a percent loan-to-value limit for mortgages they will refinance under HARP 2. One thing you cannot do under HARP is combine both a primary and second mortgage such as a home equity loan or line of credit into a single new mortgage by refinancing. You may be able to refinance your primary mortgage through HARP, but any second mortgages will have to be resubordinated allow the refinanced mortgage to be the primary one and get paid first in the event of default in order to do so.
Fortunately, lenders are becoming increasingly willing to subordinate second mortgages in order to facilitate HARP refinances. You can use the HARP program to refinance an underwater or low-equity mortgage on either a second home or an investment property of units, as well as on your primary residence.
The program rules stipulate that if your current mortgage has mortgage insurance, the new loan must have it as well. Also make sure to interview more than one to find the right fit. Glick said you'll know you've found a good broker when the person starts asking lots of questions about your loan.
So if a broker doesn't know enough to understand the questions she needs to ask, it's time to move on. Understand that because you're going into a HARP refinance, you won't get the kind of interest rates you're hearing about, like year fixed-rate loans at 3. HARP loan rates this month are generally over 4 percent.
If you feel that you were wrongly foreclosed on or received a foreclosure notice in error, go to IndependentForeclosureReview. If you're a homeowner and have questions about whether you qualify for a loan modification or refinancing under HARP 2.
Ilyce R. Glink is an award-winning, nationally-syndicated columnist, best-selling book author and founder of Best Money Moves , an employee benefit program that helps reduce financial stress. She also owns ThinkGlink. Ilyce Glink. Please enter email address to continue. Please enter valid email address to continue. Chrome Safari Continue. Be the first to know. Get browser notifications for breaking news, live events, and exclusive reporting.
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