The latest news on the new Home Affordable Refinance Program, HARP, is that Federal regulators have recently made key changes that will help borrowers who owe more on their loans than their homes are worth. Every week I receive inquiries from home owners who are current on their mortgages but can't refinance because their loan balances are higher than the value of their homes. The new HARP guidelines will help many homeowners reduce their interest rate. Based on today's rates this would be at or below the 4% range for a 30 year fixed loan.
There are two options with the new HARP changes. Timing is critical on both options and require clear understanding of your home's value. I am uniquely positioned as both a real estate broker and mortgage broker to assist you with this.
OPTION 1: Applications taken from December 1st 2011 to February 29th 2012 (yes, an extra day for us for leap year) are eligible for a loan to value (LTV) up to 125%. Appraisals will be necessary during this time period to determine the LTV. Unlimited combined loan to value ratios (CLTV) are acceptable. The combined loan to value ratio is the combination of your first mortgage and second mortgage or home equity lines (HELOC).
OPTION 2: Applications taken on or after March 1st 2012 are eligible for unlimited LTV and CLTV and this is where those most highly impacted by declining values will get relief. There has been no specific announcement if appraisals will be required but I think not since the plan is to allow unlimited LTV.
The following conditions will apply to both options:
- Current 1st mortgages must have closed prior to May of 2009.
- The loan cannot have mortgage insurance.
- Loans must be owned by Fannie Mae or Freddie Mac. Call or email and I can research this for you.
- Primary, Second Home, investment, and condos all qualify.
- Second mortgages can be subordinated with no maximum CLTV.
- You must have a qualifying credit score of 640 or more with no credit lates in the past 12 months.
- You will still have to qualify based upon income but the good news (better news?) is that with a significant decrease in interest rate your payments should go down.
Mortgage lenders are going to be swamped with applications on this program so right now is the time to get ready. Since applications must be dated no sooner than December 1, 2011 we can have everything ready to go so that we can submit the application as early as possible. For some of you it will be necessary to wait until March 1st 2012 but the anticipated rush will be even greater.
This is by far the best opportunity "underwater" home owners have had during the course of the recession.
If you are a home owner finding yourself in this position my advice is that we review your situation to determine if you are eligible and if it is best to proceed on December 1st or wait until March 1st.
Call or email me today! I will answer your questions and run the numbers to determine just how much money you can save each month!