The new enhanced HARP 2.0 is slated to be available March 19th. There are so many misconceptions about this new program floating around that I thought it was prudent to sift facts from fiction.
- Does my loan have to be backed by Fannie Mae or Freddie Mac to be able to refinance? Yes, your loan has to be backed by either Fannie or Freddie to take advantage of the program. You can check to find out if your loan is backed by Fannie Mae here and Freddie Mac here.
- Am I eligible for the HARP if I am behind on my mortgage payments? No, you must be current on your mortgage to refinance with HARP 2.0
- Are the rates higher for the HARP refinance? Mortgage rates for the HARP mortgage program are the same as for a “traditional” refinance. There is no “premium” for using the HARP program.
- If I refinanced already with HARP 1.0 can I refinance again with HARP 2.0? No, you can only use the HARP refinance once per home.
- If my mortgage was secured after May 31, 2009, can I take advantage of the program? No, there are no “date exceptions” for HARP. If your loan was not securitized on, or before, May 31, 2009, you cannot use HARP.
- Is there a loan-to-value restriction for HARP 2.0? No. All homes — regardless of how far underwater they are — are eligible for the HARP program. Only fixed rate loans get unlimited LTV treatment.
- Will my home need an appraisal to get refinanced with HARP 2.0? Sort of. Although your home’s value doesn’t matter for the HARP mortgage program, lenders will run what’s called an “automated valuation model” (AVM) on your home. If the value meets reliability standards, no physical appraisal will be required. However, your lender may choose to commission a physical appraisal anyway — just to make sure your home is “standing”.
- Do I have to use my current lender to refinance with HARP 2.0? No, you can do a HARP refinance with any participating mortgage lender.
- Can I take advantage of HARP 2.0 if I have PMI on my current mortgage? You can refinance via HARP 2.0 even if your current mortgage has private mortgage insurance.
- Can I do a cash-out refinance with HARP 2.0? No, the HARP mortgage program doesn’t allow cash out refinance. Only rate-and-term refinances are allowable.
- My original mortgage was a stated income loan. Will my income be verified with a HARP refinance? No, your income will not be verified via the HARP refinance program unless your new principal + interest payment increases by more than 20 percent. If your new principal + interest payment increases by less than 20%, or falls, there is no income verification necessary.
Thank you to Dan Green of Waterstone Mortgage for clearing up some misconceptions and misinformation on the upcoming HARP 2.0.
Make sure that you find a reputable Mortgage Lender that understands how to work through this new program. Most lenders I have been talking to don’t understand it currently. The biggest misconception I have found so far is the Debt To Income requirements, which have been a sticking point for many self-employed home owners who are current on their mortgages but have not fit the traditional DTI ratios. This is great news for them! I hope that the program is for real. I plan to be at the front of the line.