Any homeowner that has not fallen behind on their mortgage payments but cannot obtain approval of a traditional refinance because their home has declined in value is eligible for a Home Affordable Refinance Program (HARP) loan.
In the past, the HARP loan was very strict and difficult to meet eligibility requirements because it would not compensate for a 2nd mortgage. Fortunately, those restrictions have been lifted and more homeowners will be able to qualify given the limitless maximum loan to value elimination. This means that your loan will be considered for a 15-30 year fixed rate loan regardless of how much is owed on the property (provided the maximum LTV is not above $625,500 for one unit. (Limits for high cost areas are higher for 2-4 units).
Purpose of the Home Affordable Refinance Program (HARP)
The purpose of this loan is to refinance to a reduced interest rate and mortgage payment, eliminate private mortgage insurance and reduce the term period, if possible. With the HARP 2.0 loan, you can refinance the following types of properties:
- your current home and (1-4 units)
- rental property, non-owner occupied
- second home
- a 2nd mortgage (provided your 2nd lienholder will subordinate to the lst lien)
To qualify for the Home Affordable Refinance Program -HARP program:
- The mortgage must be owned by Fannie Mae (FNMA) or Freddie Mac( FHLMC).
- The property can be owner occupied, rental or a second home
- The mortgage must have been sold to FNMA or FHLMC prior to June 1, 2009.
- You must be current on mortgage payments for the past 12 months.
- The homeowner may refi under HARP 2.0 provided the payments will be lower or the product will charge from an ARM to a fixed rate. (Update)
- Any previous HARP refinances will be considered provided the note date is prior to January 1, 2014.
If the mortgage is owned by FNMA, the maximum LTV for 1st and 2nd liens are as follows:
- 15-30 year term fixed rate mortgage will have no maximum LTV
- Greater than 30 year term fixed rate or adjustable rate mortgages(ARM) greater than 5-1 ARM will have a maximum LTV of 105% (Update: increased to 125%)
(Click here to see if FNMA owns your loan.)
If the mortgage is owned by FHLMC, loan approval can be obtained for 1st and 2nd liens with a loan to value less than 105% of the current market value.
- You must provide a written financial hardship letter that discusses the nature of your financial hardship for delinquent payments or future financial hardship.
- You must be able to document sufficient income to support the new modified payment
- The unpaid principal loan balance must be equal to or less than $625,500 for one unit. (Ref . the link here for High Cost Area (HCA) loan limits for 1-4 units).
- The homeowner’s mortgage payments are greater than 31% of their gross monthly income. (However, payments could be less than 31%, at the lender/servicers discretion).
- No felony, larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction within the last 10 years.
- No appraisal necessary with a reliable Automated Valuation Model (AVM). (subject to the discretion of the lender) (Updated)
- Homeowners may choose any lender to refinance into the HARP 2.0, if the original lender is unwilling to refinance
- HARP Program to end 12/31/15. (Updated)
(Click here to see if FHLMC owns your loan.)
To apply for a HARP loan, you will need the following documentation:
- 1 month of current pay stubs
- 2-3 months of bank statements
- Credit scores should be above 600
- Copy of driver’s license
- Copy of homeowner’s insurance policy
- Additional documentation may be required upon submission to the lender’s underwriter
Contact your current lender or an approved FNMA or FHLMC lender regarding the HARP.
+Puerto Rico and a number of other states do not have any high-cost areas in 2012. *These limits were determined under the provisions of the Housing and Economic Recovery Act of 2008.
Note that the loan limits apply based on the original loan amount, rather than the unpaid principal balance (UPB).
If your current lender is unable to assist you with a HARP loan, reach out to any of the lenders listed in the participating lenders