By: David Fingerhut
Over the years, especially since 2008, most governments sought to ease the pressure of the economic downturn in their respective states. The result was a multitude of policy decisions that were intended to work towards the benefit of the common man. On the other hand, few of these plans actually became as successful as the HARP 2.0 program – a Federal program instituted by the Obama Administration. The HARP (Home Affordable Refinance Program) 2.0 program is intended to help homeowners that are underwater on their mortgage. By “help” we mean that homeowners underwater on their mortgage can actually refinance their home. As such, the program not only helps the average homeowner, but also the financial institutions that gave out the loans in the first place as homeowners will have less of a chance to default on their payment.
Clarifications of the HARP 2 Program
The HARP loans program has some basic parameters that one should familiarize themselves with when applying:
• Your loans must have been purchased by Fannie Mae or Freddie Mac by May 31, 2009. (Meaning if you acquired your home after 5/31/09, you are not eligible for HARP 2).
• You can have an unlimited Loan to Value (LTV) with HARP 2.0. This means can owe $200K and your home could have a value of $100K and you would still quality.
• Waiving the fees for borrowers that choose to take on shorter term mortgages during the refinance (some people do wish to go from a 30 Year Fixed to a 20 Year Fixed, for instance)
• To qualify, borrowers must be current on their mortgage for the last 6 months, and have no more than one late payment over the past year. If you have more than one late payment, you may need to wait and catch up until you meet the HARP requirements.
• New appraisals may not be needed to qualify – save up to $400 in most cases on an appraisal!
History of HARP
The HARP program was created in 2009, right after the economic crunch in 2008. This program was specifically made to cater to people having a loan-to-value ratio (LTV) exceeding 80% to have the ability to refinance without facing the pressure of paying for mortgage insurance. During the start of this only those people having an LTV less than of 105% were allowed to qualify. However, in that same year, the figures were revised and the HARP 2 refinance program was expanded to also cater for those people having an LTV of up to 125%. This was seen as a failure and thus HARP 2 was born. The biggest change is obviously the unlimited LTV as opposed to the 125% LTV.
There is now talk of HARP 3 which would extend the ability to refinance to all underwater homeowners. So even if you don’t have a Freddie or Fannie loan, you would still be able to refinance. This would be a home run for America if this program is passed.
David has been working in the real estate and finance space for 5 years. His most recent project is the HARP 2 refinance program.