Many homeowners have heard of HARP, the Home Affordable Refinance Program, which was introduced a few years ago to help?homeowners who were “upside down” on their mortgages to refinance and take advantage of decreasing interest rates.
Unfortunately, far too few homeowners were able to take advantage of HARP, because its qualifications were far too stringent. Since then, however, these qualification standards have loosened considerably, making qualifying a much greater possibility.
The original HARP program had a number of requirements that made qualifying difficult, including the amount by which you could be underwater on a mortgage, which was set at only 5 percent (i.e. your home’s value was $100,000 but you owed $105,000.)
And, your loan had to be owned or guaranteed by one of the two federal secondary mortgage corporations — Fannie Mae or Freddie Mac.
Since its inception, however, the HARP program has evolved into what is now known as HARP 2.0, under which many homeowners who originally could not qualify for a HARP refinance now can. While the changes that have been made are lengthy, the three major changes are:
• The amount that a ?homeowner can be upside down on their mortgage has been greatly expanded. In some cases (depending on the homeowner’s overall financial situation, including credit score) you can be as much as 100 percent upside down (i.e. your property is worth $100,000, but the amount you owe is $200,000).
• The overall qualifying standards for a HARP loan have been made less stringent.
• Finally, unlike before, homeowners can refinance through a lender other than their original lender, which in some cases makes it easier for those with private mortgage insurance attached to their loan to qualify for a HARP refinance.
The bottom line is now could be the time to consider reapplying for such a refinance.
Before doing so, there are some requirements that you should keep in mind.
First, your loan still has to have been owned or guaranteed by Fannie Mae or Freddie Mac.
Second, you must be current on your loan payments, with no late payments of 30 days or more within the previous six months (and only one allowed in the previous year.)
As to what types of properties potentially qualify for a HARP refinance, primary residences, second homes and some 1-4 family investment properties are eligible. The deadline for HARP refinances is currently Dec. 31, but may well be extended. Nevertheless, if you think you may qualify, it behooves you to check now to see if you do, and begin the application process.
Rick Shaffer hosts “The Money Show” weekdays from 4 p.m. to 6 p.m. on Boston Herald Radio.
