The new Making Home Affordable Refinance Program (HARP) is the Obama Administration’s government refinance assistance program designed to help California home owners who’s mortgage is over 80% LTV or upside down/underwater in value. This govt. upside down mortgage refinance program is unique because it’s designed to help home owners who are current on their mortgage payment but have not been able to refinance into a lower rate and payment due to declining home values.
The new HARP Refinance program is expected to play a big roll in stimulating the economy by reducing millions of homeowners monthly payments $200 – $500 a month.
The media is referring to this loan as the ‘Obama Refinance’, HARP 2.0, or the HARP Streamline Refinance. Lenders often refer to it as the Fannie Mae DU Refi Plus loan or the Freddie Mac Open Access Relief refinance loan.
Refinancing into a lower rate was worth it regardless of how upside down my mortgage was. We didn’t want to short sale, walk away, or uproot our family from our neighborhood, friends or kids schools. – Temecula, CA Homeowner
HARP UPDATE — 1/31/2013 – HARP 2 is working!! We are approving HARP 2 refinance loans that other lenders will not or cannot do. We are NOT limiting the LTV to 125% or 150% like most lenders are. We will accept eligible loans if the PMI/LPMI provider will transfer. We are accepting EA1, EA2, EA3 approvals on DU Refi Plus. And it’s OK if you have a 2nd mortgage!
HARP 2 Refinance Program Guidelines & Qualifying Criteria
- No maximum LTV (loan-to-value) – 80% LTV & higher is OK.
- Your loan must be owned (securitized) by Fannie Mae or Freddie Mac.
- No late payments in the last 6 months, up to one late pay in last 12 months allowed.
- Flexibility on appraisal requirement. May or may not be required.
- Minimum credit score of 620 needed for qualifying.
- Income must be documented – tax returns needed for commission/self employed.
- Loan must have been originated before 5/31/2009.
- If current loan has no private mortgage insurance (PMI), no PMI is required. If you have PMI now, same level of coverage is transferred to new loan.
- Jumbo high balance conforming loan amounts are allowed.
- Secondary financing (HELOC’s) must resubordinate.
- Risk based pricing & fees will be eliminated for borrowers choosing fixed rate terms of 20 years or less!
* Making Home Affordable (MHA) is a trademark of the US Dept. of the Treasury. Use of MHA or HARP name does not imply a specific endorsement by the U.S. Treasury and we are not the U.S. Government.
HARP 2.0 Refinance Program Frequently Asked Questions (FAQ’s):
Q: Do I apply directly to President Obama for my upside down government refinance?
No, President Obama is not a licensed licensed Loan Originator. Call Brad (951) 215-6119 or get a HARP Refinance Rate Quote (but only if your home is in California)
Q: Do I have to work with my current mortgage lender to do this HARP refinance?
No…..that’s why I am providing this info for you:-) So far, our government still allows you to chose who you want to work with. Seems like most people are not liking their current ‘too big to fail’ bank for various reasons. Many people realize it takes the big retail banks 60-90 days to complete a refinance and don’t like that. They may have even denied you for a loan modification at one time….what was that process like? Those same people will now process your HARP refinance.
Q: Why does my current bank say I have to refinance with them? Is that true? Why don’t they know details about the new HARP 2.0 DU REFI PLUS/Open ACCESS refinance program?
Your bank may tell you that to prevent you from working with another lender. When you call your bank, you are dealing with a call center employee who most likely doesn’t have the training, licensing, or experience needed to effectively originate specialty loans like this.
Don’t set your expectations too high with your current bank. It’s really not there job to know, and most likely are not very familiar with the underwriting guidelines or process. There job is to collect paper from you and pass it on to someone else, who then passes that on to someone else….and so on, until your loan is eventually completed (hopefully) with-in 3-4 months.
The same people who process loan modifications at the big retail banks are the same people who do HARP refinances. Have you ever heard of a quick, easy, and pleasant loan mod process?
Q: Why won’t my current big bank lender approve me for a HARP 2.0 refinance loan?
This loan program is voluntary…the government is not giving any incentive (that we know of) to the banks for them to help you. Maybe they just don’t want to take on any new risk.
Think about this – what is your current banks incentive to approve you for a HARP refinance loan? Will they make more money off your 5-6.5% rate mortgage or on a new 4.0% rate loan?
Q: Will my rate and payment go down after doing a HARP 2 refinance?
I assume the interest rate will be reduced by about 1-2%….possibly 3% lower if you chose a 15 year fixed mortgage program. However, a 15 or 20 year fixed loan may not lower the payment (may even be higher), but it would enable you to pay the loan off much quicker and save literally THOUSANDS of dollars in interest…..this reduces the cost of your home.
It’s possible the payment may not rise since the rate is so much lower on 15 year fixed loans. If you choose a 30 year foxed loan program, you may see your payment be reduced by $100 to $400/month.
Q. How do I know if my loan is owned by Fannie Mae or Freddie Mac?
Click on these links, fill out the info, and let me know who owns your mortgage.
Call Fannie Mae direct: 800-7FANNIE (8 to 8 EST) Call Freddie Mac direct: 800 -FREDDIE (8 to 8 EST)
Q: What would the interest rate be on a HARP refinance loan?
I don’t know yet, but most likely much lower than what you have now. There are like 500 variables that impact mortgages rates on a daily basis. Your credit score may play a big role. The lowest rates may be available to those who chose a 15 or 20 year fixed term and credit scores over 740.
Q: Will the HARP 2 refinance reduce the amount I owe on my loan?
It will if you make the mortgage payment:-) Unfortunately, this is not a principle ‘write down’ refinance.
Q: Can I remove a borrower from the loan when doing a HARP refinance?
Yes, for any reason too! But, you must document the remaining borrower has made the payments for the last 12 months. Person being removed must also be removed from the deed. Exception made in cases of a death.
Q: Can I add a borrower to this new HARP loan?
Yes, but the original borrower must remain on the loan.
Q: Can I do a HARP refinance if I have done a loan modification?
Q: Can I ‘roll’ closing costs into the new HARP loan?
Yes, you can roll closing costs into the loan, such as title, escrow, underwriting, impounds etc..
Q: Can I get a free or ‘no cost’ HARP refinance?
That is a trick question. Yes, I’m sure you are savvy enough to know there really is no free lunch. There are three options:
- Either pay fees out of pocket
- Roll fees into the loan
- Chose a higher rate and receive a lender credit to pay the costs.
You should compare all three options and determine which is best for you. The whole ‘free’ or ‘no cost’ refinance is so misleading…..reminds me of when all that predatory lending was going on between 2003-2008.
Q: Can I do a HARP refinance on a second, vacation, rental or investment property?
Yes, even if you had purchased it as a primary residence and converted it to a rental or 2nd home.
Q: If I like to procrastinate, how long do I have to do a HARP refinance?
You have until December 31, 2016 to procrastinate, but rates are very volatile….why would you gamble?
Q: What is considered an upside down or underwater mortgage?
If you owe $325,000, but your home is only worth or valued around $220,000, that means you are upside down or under water. But don’t worry if you aren’t upside down….see the next question.
Q: Can I do an upside down HARP refinance if I’m NOT upside down in value?
Yes, your LTV must be over 80% to do a HARP refinance. So technically, it’s not a refinance program only for those upside down.
Q: Can I do this new HARP refinance if I have already done a HARP refinance last year?
No, you can’t do multiple HARP refi’s.
Q: Can I do a HARP refinance if I have a second mortgage or HELOC?
Yes, but that second mortgage or HELOC must re-subordinate. Re-subordinate is when they agree to stay in 2nd position.
Q: Can I do a HARP refinance if I have an FHA, VA or USDA loan?
No. But call anyways to discuss doing an FHA streamline refinance or VA Interest Rate Reduction Loan (IRRL).
Q: Can I consolidate debt, get cash out, or pay off my second mortgage with this HARP refinance?
Nope. HARP only allows for rate and term refinances….a maximum of $250 cash back. You cannot cash out or payoff any debt. That would be nice though, wouldn’t it? But, we still do 100% cash out VA refinances.
Q: Will you verify income and employment on this new HARP loan?
Yes, employment and income will both be verified. The maximum allowable DTI (debt-to-income) ratio will be determined by the automated DU approval program.
Q: What is the minimum credit score for a HARP refinance?
There is no minimum credit score! But if you are paying all other debts late, show any indication of being in financial distress, or have any tax liens or judgments, that could kill the deal for sure. If payment increases by more than 20%, then you will need a minimum score of 620.
Q: Is there a minimum number of financed homes I can have and still do a HARP refinance?
Q: Would I be better off walking away, foreclosing, doing a HAMP loan modification, or doing a HAFA short sale?
That seems to be the million dollar question and depends on like 500 variables and a 1 hour psychoanalysis session…..call Brad to discuss how he came to the conclusion on why it was best for him to short sale his home. (HARP 2.0 was not available when I short sold my home).
Q: Is there a maximum LTV allowed for HARP?
In theory, no. If you are 250% LTV, it can still be done. The HARP 2.0 program loves upside down mortgages:-)
Q: Will I need private mortgage insurance (PMI) to do a HARP refinance?
If you don’t have PMI now, no. If you do have PMI now, yes, that PMI will transfer over to your new HARP refinance loan (in theory).
Q: Can I get an adjustable rate mortgage (ARM) on my new HARP refinance loan?
Yes, that is a possibility…..5, 7 or 10 year ARM is available. But the maximum LTV allowed is 105%.
Q: What if my loan is not owned by Fannie Mae or Freddie Mac?
Punt….just kidding:-) Call Brad to discuss other options.
Q: Can I do a HARP Refinance on a My Community or HomeStyle loan?
Sorry, these two loan programs are not eligible for HARP 2.
Q: Are condo’s eligible for a HARP refinance?
Yes. All the usual stuff with HOA’s and condo financing still applies….uuuggh.
Q: How many people can be helped by this HARP program, assuming mortgage rates stay low?
About 2-3 million….maybe up to 4 million, but I personally cannot do that many refinances.
Q: How do I get a HARP refinance rate quote?
by Brad Yzermans (951) 215-6119