Live Rate Quotes No social security number required
Real Estate Chart of the Day
Mortgage rates and markets change constantly. Stay 100% current by taking The Mortgage Reports by email each day. Click here to get free email alerts, or subscribe to the RSS feed in your browser.
The HARP mortgage program will be revamped soon, government officials say. A lot more homeowners will be HARP-eligible. Here's what you need to know about the changes.
The Home Affordable Refinance Program (HARP) is a government mortgage program, first introduced in 2009 as a means to help underwater homeowners.
HARP allows "underwater" homeowners to refinance their respective homes.
A home is "underwater" if the amount owed on the mortgage exceeds the value of the home. As an illustration, a homeowner that owes $250,000 on a home appraising for $240,000 is underwater.
HARP is also for non-underwater homeowners who have been hit by falling home prices.
If you don't pay mortgage insurance on your mortgage now, you can refinance through the HARP program and not have to pay mortgage insurance later -- even if your home has less than 20% equity in it.
Click here for a HARP mortgage rate.
The HARP program goes by many names. Loan officers and the mainstream media use many terms to describe HARP, but they all refer to the same government program.
When you hear any of these terms used, they're synonymous with HARP :
HARP is a refinance program only, and should not be confused with the FHA Streamline Refinance, a similar loan program for FHA-insured underwater homeowners.
HARP is for mortgages secured by Fannie Mae and Freddie Mac only. Along with FHA mortgage, jumbo mortgage and USDA loans are excluded, too.
When HARP was first launched in 2009, the government said that the program would help 9,000,000 otherwise-ineligible U.S. households to get a mortgage. At the time, rates were falling and homeowners were eager to lock in savings.
Unfortunately, the government's estimates fell short. Way short. In 2 years, just 838,000 homeowners have used the HARP program. As a result, HARP has been called a failure.
Give credit to the government, though. It believes in the HARP refinance program and wants to retool the program to meet the needs of U.S. homeowners. A successfully revamped HARP program will render millions of households mortgage-eligible instantly, and will allow homeowners nationwide to capitalize on today's low mortgage rates.
Of course, with lower mortgage rates come lower monthly payments, which frees up cash for saving or spending. And, when consumers save and spend, the economy can expand.
A revamped HARP program would be good for the U.S. economy.
So far, he government's been mum about HARP program revisions, except to say that the changes will be released "within weeks". We have some ideas about what will be different.
Loan-to-Value limits raised to 150% Currently, HARP allows for a maximum of 125 percent loan-to-value. This means that, if your mortgage is for $125,000, your home must appraise for at least $100,000. With the increased maximum, your home must only appraise for $83,333. This change will help homeowners in places like Florida, Arizona and California where home values have been hit especially hard.
Loan Level Pricing Adjustments go away Currently, HARP mortgages are subject to Fannie Mae and Freddie Mac's loan-level pricing adjustments. LLPAs change the mortgage rate for which HARP refinancers are eligible, adding 1.500% to the rate or more. "Sure, you're HARP-eligible", your lender says. "But your rate is 7%". That helps nobody. With the new HARP, expect loan-level pricing adjustments to be dramatically reduced, or waived altogether. This will help homeowners with low equity levels and low credit scores the most.
Allow homeowners to use HARP as many times as they want Currently, HARP restricts homeowners to one HARP refinance. Once you use HARP, you can't use it again. With the revamped HARP, expect the government to remove that restriction, allowing for an unlimited number of HARP refinance. This will be a boon to homeowners that first used HARP in 2009 when 30-year fixed mortgage rates were in the 6 percent range. Today, rates are near 4.
Allow HARP refinances for all Fannie Mae and Freddie Mac loans Today's HARP participant have to have had their respective mortgages purchased by Fannie Mae or Freddie Mac prior to June 30, 2009. This renders everyone from July 2009 to the present ineligible for HARP. If all Fannie Mae and Freddie Mac loans from all-time aren't declared instantly eligible, expect the HARP requirement dates to move forward into 2011. This will help homeowners who have purchased or refinanced in the last 2 years, and have lost home equity since.
Waive income and employment verification, similar to FHA Streamline Refinance Currently, HARP requires a full mortgage underwrite, with verification of income, employment and credit. It's possible that the Federal Housing Finance Agency waives that requirement for HARP loans, verifying nothing but payment history and some minimum savings amount. This would render HARP similar to the FHA Streamline Refinance, a program from a different government agency. Note, however, that if these verifications are removed from the official HARP guidelines, lenders may place overlays on their guidelines and choose to verify them anyway.
These are just a few ideas of what the government will change in the Home Affordable Refinance Program. Undoubtedly, some of these changes will be made official, and others will not. There may also be some surprises that help everyday homeowners -- not just those that are HARP-eligible.
HARP mortgage rates will be different from "regular" rates. You'll want to make sure you're shopping accordingly.
Dan Green (NMLS #227607) is an active loan officer with Waterstone Mortgage. Email Dan ator click to get a free, no-obligation rate quote.
You can also find Dan on Twitter and Google+.
Since you have reached the end of this post, you may be interested in checking out the related posts below.
