The Home Affordable Refinance Program (HARP) has helped millions of homeowners take advantage of today’s lowest refinance rates while leaving millions more out in the cold. With the election in full swing it’s doubtful that changes to HARP 2.0 will materialize before 2013. Here are several changes people are hoping the New Year will bring to this government refinance program with HARP 3.0.
Home Affordable Refinance Program Update Coming
HARP 2.0 will get a refresh before the existing program is set to expire at the end of 2013. As it exists today the Home Affordable Refinance Program has three basic requirements.
In order to be HARP 2.0 eligible you must meet the following requirements AND can qualify only once:
- Your mortgage must be owned by Fannie Mae or Freddie Mac
- The government must have backed your mortgage by 6/1/2009
- You must have paid your last six and 11 of the last 12 payments on time
These requirements might seem easy to meet; however, almost a third of underwater homeowners have privately held mortgage loans and don’t meet the Fannie Mae or Freddie Mac requirement. If your mortgage isn’t backed by Fannie or Freddie before June 1st, 2009 there is absolutely nothing you can do to qualify.
That’s where HARP 3.0 comes in. The best thing Congress and 2013’s elected President could do is eliminate the requirement that Fannie Mae and Freddie Mac own your mortgage. With millions of HARP 2.0 ineligible homeowners paying six percent or more on their home loans the potential savings is significant.
One of the ideas behind HARP is that by allowing millions of underwater homeowners to refinance with today’s best mortgage lenders it will reduce their payments freeing up cash to stimulate the economy.
Refinance Again Under HARP 3.0?
If you qualified for mortgage refinancing under HARP 1.0 you’re probably paying somewhere near 5% for your home loan. Mortgage refinance rates are in the neighborhood of 3.5% and access to the program again offers significant savings to around a million homeowners.
Unfortunately HARP 2.0 doesn’t allow for multiple mortgage refinancing. The program is limited to one time per household AND per property. If the Home Affordable Refinance Program’s goal is free up disposable income to stimulate the economy these two changes would accomplish just that.
June 1st 2009 Fannie Mae/Freddie Mac Requirement
If HARP 3.0 doesn’t remove the Fannie Mae, Freddie Mac requirement entirely it could remove the cut-off date. This requirement was intended to limit risk for lenders by requiring government backing but the cut-off date does little more than disqualify millions of homeowners.
Ideally HARP 3.0 would allow anyone to qualify for no cash back mortgage refinancing of their home at today’s lowest refinance rates. The program already limits risks and offers enough lender incentives that they have nothing to lose.
HARP 3.0 Fees Could Bite You
If you’re eligible under HARP 2.0 or could become eligible when the program changes in 2013 watch out for lender fees. Part of the incentives used to encourage lender participation is free range when it comes to certain fees.
The more you pay closing on your new home loan the less benefit you’re getting from the lowest refinance rates. Paying more at closing for things like the loan origination fee, processing fee, application fee and rate lock fee means it’s going to take longer to break even recouping your out-of-pocket expenses.
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You can learn more about getting the best deal for your HARP 3.0 refinance without paying unnecessary lender fees or 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.
