The federal-government designed a program to help homeowners refinance their homes at current mortgages rates regardless of how much they owe on their mortgage even if it is more than their home is currently worth; this is the basis of the Home Affordable Refinance Program(H.A.R.P.). The goal is to provide borrowers an opportunity to refinance into a more affordable or suitable mortgage. Many consumers are able to lower their interest rate thus providing for a lower monthly mortgage payment, a more affordable mortgage payment. You may apply for HARP 2.0 Loans until Dec 31, 2015.
Common HARP Loan Scenarios:
- Lowering a current interest rate to reduce monthly payments
- Convert from a variable rate loan or adjustable rate mortgage (ARM) to a fixed product resulting in a stable monthly payment
- Convert from a 30 year amortization to a shorter 15 or 20 year amortization creating faster equity growth.
Possible reduced Qualifications can apply for a HARP 2.0 Loan
- Can refinance while owing more on your home than it is worth.
Consumers can refinance regardless of how far underwater they are on their loan to value. The loan-to-value limit is no longer set at 125 percent.
- Consumers can refinance without an appraisal and potential reduced underwriting guidelines.
Many borrowers can bypass an appraisal and experience reduced qualification requirements allowing for a quicker loan process.
- Income verification can be less stringent
This benefit an vary from lender to lender but in some cases 12 months reserves to cover your mortgage payments may be sufficient to refinance.
A quick update on HARP 3.0 is still being discussed in congress so has yet to be put in place. A list of changes being considered are:
- Mortgages currently not backed by Freddie Mac or Fannie Mae would qualify for HARP 3.0
- Reducing credit qualifications or possibly eliminating completely and waiving income and employment verification guidelines.
- Changing the current HARP eligibility date from May 2009 to 2011
- A homeowner that have already taken advantage of a HARP refinance would be allowed refinance again under HARP.