The government refinance program known as HARP (Home Affordable Refinance Program) has undergone a lot of changes recently that affect the requirements for eligibility. If you’re underwater and have been unable to qualify for mortgage refinancing in the past it will be well worth your while to look into the new government refinance program. Here are the key points you need to know about the government refinance program known as HARP.
HARP 3.0 News
HARP 3 rumors started swirling after President Obama’s January 2012 State of the Union Address. The President declared that every responsible homeowner should refinance their mortgage promising to cut through the red tape preventing millions of underwater homeowners from doing so. Here’s an update with the latest HARP 3 news and the Whitehouse campaign they’re calling #myrefi.
The biggest problem with the HARP program to this point is the requirement that Fannie Mae or Freddie Mac have your home loan. HARP 3.0 is rumored to eliminate the Fannie Mae/Freddie Mac requirement, meaning every responsible homeowner (meaning you have no late payments) could qualify for the program. These changes are rumors and don’t appear to be part of proposed legislation under the Responsible Homeowners Act of 2012. HARP 3.0 could also extend help to underwater homeowners with jumbo mortgages.
No one knows when HARP 3.0 will be official or for whom the program will be best suited. Based on the rumors the new government refinance program could target self-employed homeowners or anyone unable to qualify for mortgage refinancing because their original home loan was based on stated income.
There are millions of underwater homeowners in the United States who have been unable to take advantage of today’s low refinance rates excluded from HARP 2 that could benefit from the changes proposed in HARP 3. You can learn more about President Obama’s refinance plan by visiting the website at www.wh.gov/refi or following #MyRefi on twitter.
HARP 2.0 Program Overview
If you’re underwater in your existing home loan, meaning you’re owing more than your home is worth, you may be able to take advantage of today’s low refinance rates without paying cash-in or buying private mortgage insurance. This government refinance program goes by several names. It’s officially called the Home Affordable Refinance Program (HARP) but it’s also been called the Making Home Affordable program and the Obama Refinance Plan.
Like any government program there are requirements to be met in order to qualify. You can qualify for mortgage refinancing under HARP 2.0 if:
- Your home loan must be held by Fannie Mae or Freddie Mac
- Fannie/Freddie must have acquired it before June 1st, 2009
- You must not have any late payments within the past 6 months
- FHA, VA, USDA or Jumbo Mortgages are not eligible
How Do I Tell if My Mortgage is Fannie Mae or Freddie Mac?
The Fannie/Freddie requirement for mortgage refinancing is critical. You can check the status of your home loan using online lookup tools on Fannie Mae & Freddie Mac’s website using the links below. You must find your address using these tools in order to be eligible for this government refinance program.
Fannie Mae: http://www.fanniemae.com/loanlookup/
Freddie Mac: https://ww3.freddiemac.com/corporate/
If your mortgage is not found with Fannie Mae or Freddie Mac you will not be eligible for refinancing under HARP. It is rumored that HARP 3.0 will remove this requirement for homeowners who are not under Fannie Mae or Freddie Mac; however, as of mid-2012 this legislation has not materialized. Once you find your address using Fannie Mae or Freddie Mac lookup you’re ready to start shopping from today’s best mortgage lenders for HARP refinancing.
How to Shop for HARP Mortgage Lenders
Just because you’re eligible for a government refinance program doesn’t mean you don’t have to worry about overpaying lender fees or points. Because lender participation is voluntary, the government built incentives into the program allowing lenders to markup rates and fees for HARP applicants.
This means shopping for the lowest refinance rates is crucial while avoiding unnecessary discount points and fees. When comparing refinance rates from the top mortgage companies keep in mind that most lender quote interest rates that include points first. Paying unnecessary discount points to buy down your mortgage rates increases your out-of-pocket expenses, making it more difficult for you to break even recouping closing costs. The same is true with fees like the loan origination fee which is paid to the company or broker arranging your refi.
I’ve reviewed a number of the best mortgage companies on this site and I’ve found the lowest fees are often available from community based credit unions. I recommend avoiding the big names like Wells Fargo and Bank of America (which has a 90+ day backlog) in the beginning and start shopping from your local credit unions.
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You can learn more about getting the best deal on your HARP refinance while avoiding junk fees and discount points by checking out my free Underground Mortgage Videos.
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My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
