Underwater Mortgage? HARP Refinance Slashes Your Payment By 34%

The Home Affordable Refinance Program (HARP) was designed to help homeowners with underwater mortgage loans qualify for today’s best refinance rates. The program was just revised under HARP 2.0 to get more people qualified. If you were denied when the program first came out or have been putting off refinancing because you think you won’t qualify, HARP 2.0 could lower your payment by an average of 34%. Here’s what you need to know about qualifying for the government refinance program known as HARP 2.0.

HARP is for Underwater Homeowners Like You

Being underwater means you owe more for your mortgage loan than your home is worth. In the past having a loan to value ratio higher than 80% made it difficult, even impossible to qualify for mortgage refinancing. That’s where the Home Affordable Refinance Program comes in.

Much like the FHA streamline refinance or the VA’s Interest Rate Reduction Refinance Loan (IRRRL), HARP removes the requirement for home appraisal and income verification that come with traditional mortgage refinancing. By not requiring an appraisal HARP eliminates the loan to value requirements preventing millions of underwater mortgage holders from qualifying for mortgage refinancing.

This government refinance program also eliminates mortgage insurance for homeowners with less than 20 percent equity making HARP refinancing that much more attractive.

If you’re not paying for Private Mortgage Insurance (PMI) on your existing home loan you won’t be required to pick it up with your HARP refinance.

HARP Government Refinance Program Requirements

The problem with the original Home Affordable Refinance Program is that it was limited to loan to value ratios under 125%. The program was also plagued with lender overlays, lender specific rules limiting their participation in the program. These program overlays often required credit checks and appraisals which defeated the purpose of the program entirely.

President Obama revised the Home Affordable Refinance Program by executive order and HARP 2.0 was born. Gone is the 125% loan to value limit and there are new incentives to reduce risk for lenders and eliminate program overlays.

Here are the government refinance program requirements you need to meet to qualify for your HARP refinance:

  1. Fannie Mae or Freddie Mac must have acquired your mortgage prior to June 1st, 2009
  2. You must have made your last six payments on time and can only have one late payment out of your last 12
  3. Your loan to value ratio must be higher than 80 percent

No matter how far underwater you are in your existing home loan if you meet these requirements you can take advantage of today’s best refinance rates under HARP.

This isn’t to say that program overlays don’t exist with HARP 2.0, you’ll still find lenders playing by their own rules. If one lender denies your HARP 2.0 application and you’re willing to do a little legwork there’s a lender out there willing to approve you.

Beware Lender Fees on Your HARP Refinance

Just because you’re HARP refinance eligible doesn’t mean you don’t have to watch out for closing costs like the loan origination fee and discount points. In fact, part of the incentives included in HARP 2.0 to sweeten the deal for lenders is free reign to charge whatever they like for certain fees.

This is why refinance rate shopping with zero discount point quotes comparing interest rates and fees is so important. Pay close attention to and question the fees found in section 800 of your Good Faith Estimate. Common junk fees include processing fees, application fees and anything resembling a rate lock fee.

The less you pay closing on your HARP refinance the more benefit you’ll get from today’s best refinance rates. The reason fees are so important is that if you’re not able to break even recouping your out-of-pocket expenses because you paid unnecessary discount points or junk fees you’re going to be losing money no matter how low the interest rate.

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You can learn more about getting the best deal on your HARP refinance by avoiding lender junk fees and points by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to get you started refinancing with today’s best mortgage lenders without overpaying…

Is a HARP Refinance Right For You?

Is the government refinance program known as HARP 2.0 right for you? The Home Affordable Refinance Program (HARP 2.0) has undergone a number of revisions intended to get more people qualified. If you have less than 80% equity in your home and are struggling this government refinance program is worth looking at. Here are the basics you need to know about getting your HARP 2.0 application approved.

Am I Eligible for HARP 2.0?

The deciding factor for most folks is whether or not Fannie Mae or Freddie Mac purchased their mortgage before June 1st, 2009. If your mortgage is held privately by a lender like Bank of America or Wells Fargo you are not eligible for HARP 2.0.

If you’re not sure if your mortgage is privately held both Fannie Mae and Freddie Mac have a way of checking online.

Fannie Mae Loan Lookup:

http://www.knowyouroptions.com/loanlookup

Freddie Mac HARP Eligibility Lookup:

http://www.freddiemac.com/avoidforeclosure/harp_eligibility.html

HARP 3.0 is rumored to remove the Fannie Mae or Freddie Mac government refinance program requirement; however, these changes have yet to materialize.

Once you verify that Fannie Mae or Freddie Mac have your mortgage you need to be current on all your payments for the last six months. Beyond the six month requirement you must also have made 11 of your last 12 payments on time and have less than 20% equity to qualify.

I’m HARP 2.0 Eligible, Now What?

HARP is set to expire at the end of 2013. The next step for you once you’ve determined that you’re HARP 2.0 eligible is to shop for a lender. This is where it gets tricky for many homeowners. What you might discover is that even though you’re qualified for this government refinance program is that your lender denies your application.

What the #$%@?! I’m eligible, why was my HARP refinance application denied?!

Lender Overlays: The Fly In Your Soup

HARP 2.0 has come a long way to get underwater homeowners qualified for mortgage refinancing. Where it hasn’t made great strides is limiting risk for mortgage lenders. Overlays are special rules lenders use to limit their risk with the program. These rules include limits on loan-to-value, minimum credit score and income. It’s not uncommon for homeowners with 125% loan-to-value or higher to find their current lender denies a HARP refinance application.

Was Your HARP Refinance Denied? Keep Trying…

Not all mortgage lenders enforce overlays with the Home Affordable Refinance Program and the ones that do all play by their own rules. Just because one lender denies your HARP application doesn’t mean another one will. That’s why shopping around for a government refinance program approval is so important.

Remember once you’re approved you’ll still be required to pay fees to close on your HARP refinance.

Just like lender overlays closing costs vary widely from one lender to the next and some fees are negotiable. The loan origination fee is an example of one negotiable closing cost that you’ll want to pay as little as possible on your HARP refinance. Other fees like discount points drive up your out-of-pocket costs reducing the benefit you’re getting from today’s low mortgage rates.

Click Here For More Details…

You can learn more about getting the best deal on your HARP refinance by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
  • Underground Mortgage Videos
Here’s a quick sample to get you started refinancing with today’s best mortgage lenders

The Making Home Affordable Program

President Obama’s Home Affordable Refinance Program continues to evolve to make more homeowners eligible; however, many banks are still playing by their own rules. The Making Home Affordable refinance program was part of the 2009 stimulus package and was intended to help millions of underwater homeowners take advantage of today’s low refinance mortgage rates.

While the program looks great on paper banks and mortgage lenders have been hesitant to adopt HARP guidelines as the government intended. Most lenders are enforcing their own Loan-to-Value requirements ranging from 105-125 percent even though HARP 2.0 removes the LTV requirement.

Many homeowners are finding out the hard way that just because you’re qualified under the Home Affordable Refinance Program guidelines finding a lender to approve you can be difficult. Don’t worry, if you’ve been turned down for your HARP refinance there are options available to you.

HARP 2.0 & The Making Home Affordable Program

The Home Affordable Refinance Program (HARP) is a subsection of the Home Affordable Refinance Program. This program was supposed to help seven million underwater homeowners lower their payments with today’s low refinance rates. The goal is to boost the economy by stimulating spending by homeowners with lower mortgage payments.

The problem with HARP is that mortgage underwriting standards enforced by banks and lenders restrict the number of applicants being approved. In its original form the Making Home Affordable program helped fewer than one million underwater homeowners.

HARP 2.0 came along at the end of 2011 and removed the original 125% loan-to-value requirement. The intent was to reach the six million homeowners left out the original Making Home Affordable Program.

While the government refinance program guidelines have been greatly relaxed under HARP 2.0, not many banks and lenders have adopted the government’s guidelines, especially when it comes to loan-to-value, which has resulted in the latest tweak to the Making Home Affordable Program.

HARP 2.0 With a Side of Private Mortgage Insurance

Under the original Making Home Affordable Program if you had Private Mortgage Insurance (PMI) you were most likely denied refinancing. It didn’t matter if you had borrower-paid PMI or LPMI (Lender Paid Private Mortgage Insurance); if you had PMI your HARP refinance never made it to closing.

HARP 2.0 smashes the PMI barrier which means you should be able to refinance if Private Mortgage Insurance held you back in the past. While it’s true banks and mortgage lenders are still playing by their own rules when it comes to the Making Home Affordable Program, loan-to-value, and PMI, there are lenders out there that will approve your application with PMI or LPMI.

If your HARP application is denied due to PMI or your loan-to-value ratio, try reapplying with a different lender.

Community-based credit unions are an excellent starting point when shopping for HARP approval. If you get turned down for the Making Home Affordable refinance program, don’t give up. Keep applying and you will find banks and lenders willing to approve your HARP 2.0 application.

HARP 2.5 In The Works?

Rumors of HARP 3.0 seem to be left behind as members of the Senate are working to draft the Responsible Homeowner Act of 2012. This proposed legislation allows homeowners backed by Fannie Mae or Freddie Mac to essentially streamline refinance their homes. FHA homeowners have had the streamline refinance option available for years, allowing them to refinance without a home appraisal, verifying employment or documenting income.

The HARP 3.0 rumors offered a glimmer of home for homeowners with non-Fannie and Freddie backed mortgages but the proposed legislation appears to retain the requirement. Whatever form the Responsible Homeowner Act of 2012 ultimately takes the bill is a long way from being approved in the House and the Senate and being signed into law by the President. Stay tuned for more news about HARP 2.0, 2,5 and the Responsible Homeowner Act.

Click Here For More Details…

You can learn more about getting the best deal for your next home loan while avoiding unnecessary discount points and lender fees by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
  • Underground Mortgage Videos
Here’s a quick sample to get you started with today’s best mortgage companies without falling for unnecessary fees…