Image by woodleywonderworks via FlickrOne of the objectives of HARP was to help the millions of homeowners who were underwater with their mortgages. In some housing markets the outstanding mortgage balance is about half the market value of the house. For example, a homeowner owes $500,000 on his mortgage but the house is valued at $250,000. In this example the LTV is 200%.
The revamped program, entitled HARP Phase 2, means that those homeowners who are underwater the most and are desperately in need of help, will finally get some relief. They will be able to refinance at the current low rates. The FHFA expects that the modified HARP will help about 1,8 million homeowners. If this target is reached it would be a great improvement from the 900,000 borrowers the program currently helps.
This might seem like a slam dunk case. But qualifying for the financing might be an issue for many borrowers.
>>> The mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac.
>>> The mortgage must have been sold to Freddie Mac or Fannie Mae on or before May 31, 2009.
>>> The loan to value must be greater than 80%.
>>> The homeowner must be current on the mortgage at the time of refinancing, with no late payments in the last 6 months or only 1 late payment in the last 12 months.
Here are the big issues.
1. If your mortgage is not owned or guaranteed by Freddie Mac or Fannie you have no chance of a refinance under the program. There are millions of private mortgages that are underwater.
2. If you are going to refinance from a fixed rate mortgage to an adjustable rate mortgage the maximum loan to value is 105%. This is not a good time to go from fixed to adjustable, but there are some borrowers that would like this option.
Let's hope that the majority of lenders get behind the program and help the millions of borrowers that are underwater.
For more articles on the housing market and mortgages please visit:
House Refinance Center
Related articles.
HARP Mortgages: Now is the time to refinance
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