Nearly a quarter of mortgage-paying homeowners are underwater, according to the most recent study from data firm CoreLogic. That means more than 10 million Americans owe more money than their homes are worth.
If you’re in that boat – or should we say submarine? – there could be good news. The government recently revamped its Home Affordable Refinance Program (HARP) to make more people eligible for lower mortgage rates. One of the biggest changes to HARP was removing the loan-to-value ratio cap, meaning people who owe more than 125 percent of what their homes are worth may now be eligible.
While the program was officially launched late last year, only now are mortgage lenders geared up to start taking applications.
Maybe you’ve heard of this program before – it started in early 2009. Since then, it’s helped more than 900,000 homeowners refinance, according to the Federal Housing Finance Agency. Here’s exactly what they’re changing so it will help even more homeowners:
• Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
• Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
• Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;
• Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model);
• Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to Fannie and Freddie on or before May 31, 2009.
Interested? Here’s a recap of the eligibility requirements…
1. Fannie/Freddie-backed. The mortgage must be guaranteed by government-sponsored Fannie Mae or Freddie Mac. You can check if yours is online – here’s the Fannie Mae loan lookup and here’s Freddie Mac’s. Check Fannie first, since they’re bigger and more likely to have it. You can also contact your mortgage company.
2. Be current. You have to be up-to-date with your payments. As Stacy said, this means you can only have “one missed (30-day delinquent) payment in the last year, and none in the last six months.” If you’re not there yet, don’t worry – there’s still time to catch up. The HARP program was extended to run through the end of 2013 instead of having a summer 2012 deadline. So there’s still time to qualify – just make on-time payments until you fit the requirements.
3. Problem credit? No problem. Timely payments are the big thing with this particular program. There’s no minimum credit score, qualifying income, or appraisal required.
4. Be underwater, or close to it. This program is specifically designed for underwater homeowners. You can qualify without being underwater, but your mortgage must be more than 80 percent of your home’s market value.
5. Double-dips OK. People with Fannie Mae loans can refinance through HARP a second time if they took advantage during the first couple of months of the program – between March and May 2009.
You can get the particulars on how refinancing will work by checking with Fannie or Freddie – there’s a lengthy Frequently Asked Questions about Home Affordable Finance section on Fannie Mae’s website. Freddie Mac also has a lot of online resources for HARP and other programs.
Even if you don’t qualify for HARP, don’t give up. There are other options out there, and free help to figure them out – like the 24-hour Homeowner’s HOPE hotline, which offers counseling services from government-approved housing experts. And maybe refinancing isn’t the best solution for you – check out Ask Stacy: Should I Refinance My Home? for some thinking on the math and logistics.
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