New HARP refinance program: are you eligible?
In order to finance their homes at much lower mortgage rates, underwater homeowners have been waiting for the fruition of HARP 2.0 – the revamped Home Affordable Refinance Program. You can now start applying for a refinance, but that doesn’t mean that you’ll automatically qualify. There are still several requirements that you’ll need to meet.
HARP is meant to help those that owe more on their home than it’s worth. It was originally for borrowers that owed up to 105 percent of their home’s market value, but that cap was later raised to 125 percent. The cap has now been lifted completely.
The qualifications
HARP 2.0 stipulates that you will only qualify if you have not missed a payment in the last 6 months and only missed one payment within the last year. If you don’t meet these criteria, you’ll need to wait to apply. And if you’ve already gone through a HARP refinance, you won’t qualify at all.
The wait
While you can start applying for HARP 2.0 now, there are only a handful of lenders accepting applications. That’s because Fannie Mae and Freddie Mac have to update the changes made to HARP in their automatic systems. That process could take up to a few months to complete. But there’s a catch – if you can find a lender that underwrites manually, then you can get started much earlier.
The upside
If you qualify for HARP 2.0 and lower mortgage rates, you could save thousands over the life of the loan. It won’t reduce your principal balance, but you’ll pay significantly less in interest. And if you refinance with your current lender, your credit won’t be checked and you won’t need proof of income – that’s good if you’ve had a pay cut or a hit to your credit. The lender will simply call your employer for proof of employment.
If you have to wait to refinance, start getting ready now. Fix any errors on your credit history and talk to your lender to figure out when and how you can refinance under the new guidelines.
I’m interested to see whether or not mortgage rates rise while homeowners are waiting for HAPR 2.0 to kick into gear. With the Fed doing their best to keep interest rates low – at least until the middle of 2013 – I’m thinking that rates will stay low for a while longer. What do you think?
