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HARP 2.0 Refinance Program for Conventional Loans

Orange County, CA – Home values have steadily declined since 2006. That’s when the bubble burst on the overheated housing market. During this same period of time interest rates have fallen dramatically as well. They’ve set new record lows. Many howmeowners have sought to take advantage of these low ratrs to reduce their monthly payment. But with their home equity erased they have been unable to refinance. Enter HARP 2.0, the second edition of the Home Affordability Refinance Program. This program allows homeowners to refinance their loan if they are underwater on their Fannie Mae or Freddie Mac owned loan. The previous version allowed homeowners to refinance up to 125% of their loan. The HARP 2.0 refinance program changes that completely. There is no maximum LTV.

Let’s look at an example. John and Mary Homeowner purchased a lovely home in Rancho Santa Margarita, CA in 2007 for $525,000. They put $110,000 down and obtained a conventional loan for $415,000 at 6.000%. Current home value is $300,000 and LTV is 133%.  With the HARP 2.0 refinance program, John and Mary are able to refinance their home loan down to 4.000%. This saves them about $500/month and about $6,000 each year. This scenario is not uncommon for Orange County homeowners.

There are additional features and benefits of the HARP 2.0 refinance program.

  1. If you do not have mortgage insurance now then mortgage insurance is not required on your new loan, regardless of LTV. This also applies if you had mortgage insurance on your original loan and then canceled it.
  2. If the property is now a 2nd home or rental property, it’s still eligible for the HARP 2.0 refinance.

Do I qualify for the HARP 2.0 refinance program?

Not every homeowner will qualify for this program. There are specific requirements that must be met to be eligible. Below are the basics:

  1. Your loan must have been sold to Fannie Mae or Freddie Mac prior to June 1, 2009. Fannie Mae or Freddie Mac are not laon servicers. Therefore, your loan may still be serviced by Bank of America, Wells Fargo, Chase or many others. However, Fannie Mae or Freddie Mac may still own it. You can check for yourself by entering the information required on their loan lookup pages. Search here for Fannie Mae and here for Freddie Mac. Note that this search will not tell you the date that they acquired your loan.
  2. If you want to refinance into a low interest rate ARM, then your LTV is capped at 105%.
  3. An appraisal may still be required to determine the LTV.
  4. You can only use the HARP program once. If you refiannced using HARP 1.0 then you can’t refinance again using the HARP 2.0 refinance program.
  5. Homeowners with 2nd liens must re-subordinate it. It can not be refiancned with the first.
  6. If you have an FHA or VA loan, this program does not apply to you. You will want to look into an FHA streamline loan or a VA Interest Rate Reduction Loan.

The HARP 2.0 refinance program has been welcomed with open arms. In the past 6 weeks, the 5 of the largest servicers have taken 400,000 HARP 2.0 refinance applications. The average household could save $2,500 to $3,000 per year. For Orange County homeowners, that number is likely to be even greater.

To take advantage of this program and see if you’re eligible, you’ll need to contact a lender who is offering the HARP 2.0 refinance program. Not all lenders do so feel free to contact me !

Scott Storace

 

 

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