See If You Can Benefit

These days, the word harp stands for more than just a beautiful musical instrument. In the home loan arena HARP 2.0 stands for the Home Affordable Refinance Program. But what is HARP 2.0 exactly and–most important of all–can you benefit? Read on for details.

HARP 2.0 is an enhanced refinance program that allows homeowners with qualifying mortgages to be able to take advantage of today’s historic low interest rates, even if their home has decreased in value or is worth less than their mortgage balance. The program was first enacted in May 2009, but was enhanced recently to give more homeowners the opportunity to refinance.

Who Qualifies?
To qualify for this program, your current mortgage loan must be owned by Fannie Mae or Freddie Mac and Fannie Mae or Freddie Mac must have taken delivery of the loan on or before May 31, 2009. Fannie Mae’s program is called RefiPlus and Freddie Mac’s is called RefiRelief.

You may be making payments to your lender or servicer without realizing that Fannie Mae or Freddie Mac actually own the loan. You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites:

What Features?
One of the exciting features of HARP 2.0 is that there is no longer a limit to how much equity is needed to refinance. What’s more, there are no underwater limits! Previously, borrowers whose loan-to-value limits were greater than 125 percent were ineligible to refinance. Now, borrowers can refinance no matter how far their homes have fallen in value.

In addition, many of the fees associated with the original program have been reduced or eliminated. Also, a full appraisal may not be required–which can save time, money, and perhaps some anxiety.

HARP 2.0 allows for refinancing to a lower interest rate and payment, shortening the term of the loan, moving from an adjustable rate mortgage to a fixed rate mortgage–or some combination thereof.

Occupancy may have changed since the original loan was written, and in some cases the property can even be listed for sale.

Which Mortgages?
HARP 2.0 only applies to first mortgages, so if there is a second mortgage or home equity loan in place, it will need to remain in place. Most second lien lenders have been very accommodating in allowing for HARP refinances to occur. If the current loan has private mortgage insurance (PMI) on it, most PMI companies are very flexible and accommodating with transferring coverage from the current loan to the new loan.

The Bottom Line
There are a lot of details associated with RefiPlus and RefiRelief, but the good news is that you don’t have to figure everything out on your own. Many people who did not think that they would be able to refinance have been delighted to learn that they could.

This article was taken from my June 2012 issue of YOU Magazine. Click here to view the full newsletter.

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