May 23, 2017

New HARP Refi Program

Read the most current information about the HARP 3.0 Refinance Program

President Obama recently announced a new Home Affordable Program (HARP) Refinance Program to help underwater homeowners.  This might just be the thing that allows you to refinance your mortgage at today’s historical low interest rates you’ve been hearing about but couldn’t take advantage of.

Here is a look at some of the key elements of this program. More guidelines will be announced in November and many lenders are expected to roll out the plan in December.  These are only for individuals with Fannie Mae and Freddie Mac loans.

No loan-to-value restriction

The program used to have a limit of 125% loan to home value but now that restriction has been lifted. Now you no longer have to worry about how far your home has fallen in value since you took out your mortgage. The 125% limit has been totally eliminated, meaning you can still refinance even if your home value is a third of what you owe on your mortgage, or even less.

Appraisals, fees waived

Because the home value is no longer an issue an appraisal may no longer required. Once your loan application is put through the Automated Underwriting System (AUS) you may receive an appraisal waiver. And the new guidelines waive certain fees charged at closing, particularly for borrowers who choose to refinance into 15- or 20-year fixed-rate mortgages. The administration hopes that by reducing high closing costs more homeowners will be able to refinance.

There will still be some fees associated with closing costs on the new loan, which can be financed as part of the new mortgage.

Fannie Mae, Freddie Mac mortgages only

Your loan will need to be a Fannie or Freddie Mac loan. Since they already insure the loans against default, it is smart for them to want to get as many homeowners as possible in a position to refinance to a lower rate and lower payments – making them less likely to default.  They don’t care if the interest rate is lower, since the interest is paid to the investors.  Find out if you loan is a Fannie Mae or Freddie Mac loan by clicking on the link.

Who is eligible? 

You can have no late payments in the last six months to qualify for the new HARP refinance and you can’t have been late no more than once in the past year. The mortgage must have been transferred to Fannie Mae or Freddie Mac no later than May 31, 2009. The mortgage must be on a one-to four unit dwelling that serves as your primary residence.

How much can I save?

That depends on your current interest rate, your current loan amount and several other factors. Give me a call and let me give you a quote.

What kind of loans can I get? 

One of the biggest changes to the program is homeowners are encouraged to refinance into shorter than 30 year term loans by waiving most or all program fees for 15- and 20-year fixed rate loans.  The current program requirement is that borrowers refinance into 30-year fixed-rate mortgages only. Homeowners will still be able to refinance into 30-year loans if they wish, but they’ll have to pay slightly higher fees if they do. Combined with the ultra-low rates now available on 15-year mortgages, that’s a significant reason for borrowers who’ve been in their homes a number of years to shorten up their term and start building back more quickly toward positive equity.

When is it available?

Full details of the program are expected around November 15 and we expect some lenders to start offering the program by December 1st.  For sure by the first quarter of 2012 most participating lenders will have the program ready to go.  Stay turned to this website for more information.

This is a voluntary program so not all lenders may participate. But if you have a Fannie Mae or Freddie Mac mortgage, you can refinance with a participating lender even if your current one is not in the program. 

What other requirements will there be?

You will need to be current on your existing loan and their will be certain credit score guidelines that you will have to meet – and maybe income requirements as well.  And because the program is voluntary, lenders may have their own requirements they overlay on top of the HARP guidelines.  It is also not clear if the new guidelines will also add what we call “risk-based” price adjustments. These are hits tacked onto the interest rate to reflect certain risk factors. Since being underwater in itself is considered a major risk factor, the interest rates may be higher than those quoted for normal purchase or refinance loans.

Call me at 801.550.1222 if you have an interest in finding out more about his loan program.