Wednesday, April 4, 2012

Can I Refinance My Home if I am Underwater on My Mortgage?

The answer is (drumroll please)...... MAYBE.  Introducing HARP 2.0.  Yes, it's a new and improved version of the Home Affordable Refinance Program (HARP) which has been around with limited success since March, 2009.  HARP 2.0 was rolled out in March 2012 and now allows more homeowners to refinance their property that's "underwater" (meaning you owe more than your home is currently valued) due to two significant changes in the program.

The first change removed the loan-to-value (LTV) restriction, meaning it no longer matters how much the home appraises for (the previous restriction capped the LTV at 125%).  The second change allows for any required mortgage insurance (PMI) policy on your current loan to transfer to the new loan at the same rate.  PMI is the insurance required by your lender to obtain if you have less than 20% down of your own money compared to the home's value. 

These two changes are good news for homeowners so that they can take advantage of the INCREDIBLY LOW interest rates (which by the way, are moving up.. so hurry and buy or re-fi).


  • To be eligible for program:
    • Current loan must have been originated prior to May 31, 2009
    • Current loan must be owned by either Fannie Mae or Freddie Mac
      • Three ways to find out if current loan owned by Fanie Mae or Freddie Mac:

  • 1-Unit Primary Residence properties only (no Condos, 2nd Homes, or Investment Properties allowed- townhomes ok).
  • No 30+ day mortgage late payments allowed over the last 6 months, and only one 30+ day mortgage late payment allowed over last 12 months
  • 620 minimum credit score
  • 45% max debt ratio
  • No pre-payment penalty
  • If no mortgage insurance required on original loan, then no mortgage insurance required on new loan regardless of LTV
  • Appraisal required unless automated approval system grants a “waiver”
  • New loan can be either 20 Year or 30 Year term (if current loan owned by Fannie Mae, then 15 Year term,  5 Year ARM, and 7 Year ARM options also available but only up to 105% LTV)
  • Only a limited number of lenders are actively participating in program, which has been extended through December 2013

Does this work for you?   I am all about spreading good news (and good cheer) and I hope this information can save you money!  To find out more about this program and to see how much money you will save every month, please contact my friend Joanne Rotella at joanne.rotella@fairfieldmortgage or call her at 404-290-4800.  Just think of Joanne as an angel, playing beautiful music from a HARP.

1 comment:

  1. Before taking the final decision, it is important that you contact the company and discuss the various aspects of the policy with their consultant.

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