The long-awaited federal refinance program called Harp 2.0 finally started on Monday. It will, in theory, allow many people to refinance mortgages and lower payments in spite of owing far more than their homes. Some lenders began taking applications last November. But the federal government had to work out some issues with the program and lenders before it could officially launch it.
An earlier version of HARP allowed homeowners with mortgages backed by Fannie Mae and Freddie to refinance, but only if their new loans were no more than 125 percent of their home’s current value. This did not help most people in Phoenix and Scottsdale where home values are approximately half of what they were in 2006. The newest program lifts that loan-to-value restriction completely so will help more people who own Phoenix or Scottsdale homes. The ultimate goal of the Federal government is to help homeowners save money and fend off foreclosures by lowering payments. Only time will tell if it actually helps.
This is a summary of the program rules:
A homeowner must have a mortgage purchased by Fannie Mae or Freddie Mac on or before June 1, 2009. Jumbo loans, FHA loans and bank portfolio loans don’t qualify.No limits on the loan-to-value ratio of 30-year mortgages for primary residences.No limits on combined loan-to-value for homeowners with a first mortgage and a home equity credit line or second mortgage.Lower refinancing fee .Second homes and investment properties qualify for the HARP program. But borrowers must show they have savings to cover two months of mortgage payments for second homes and six months for investment properties.Homeowners are not required to purchase mortgage insurance if they don’t have it now.No appraisals required; lenders run an “automated valuation model” to value a home.Borrowers can’t have made a late payment in the past six months.Homeowners can’t have refinanced through the first HARP programBorrowers must qualify for the loan based on employment, credit and assets. This is a change from when the original expanded HARP was announced in November. To find out if your mortgage is owned by Fannie or Freddie go to: http://www.freddiemac.com/
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