I was tooling around the internet looking for news on topics affecting the real estate market of the near future. While researching the new HARP 2 program, I found this awesome article by Ragan Robinson of the Gaston Gazzette.
( http://www.gastongazette.com/news/money-63969-mortgage-continue.html )
It's a great primer for how HARP 2 works and who benefits. He breaks it down by the numbers in easy to understand jargon. This program is great stuff if you'd like to refinance, but haven't had much success. HARP 2 might just be for you.Â Take a read. Great Job, Ragan!
Can HARP 2.0 save you money on the mortgage?
Home values continue to fall in the wake of the nationâ€™s housing crisis. Millions of homeowners are underwater â€” owing more on mortgages than their homes are worth.
Recently announced changes to the Home Affordable Refinancing Program are part of a last-ditch effort by the federal government to help struggling homeowners. The refinancing program is aimed at those who have spent the years since the recession keeping up with mortgages as other walked away from debt. The plan: Save those folks some money on their house payments by helping them take advantage of todayâ€™s historically low interest rates.
Hereâ€™s a look at how the newly updated program, dubbed HARP 2.0, will work.
Who is eligible?
There are the basics:
1. Your loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
Not sure about that? Go to FannieMae.com and choose the loan look up tool or go to FreddieMac.com and click on â€œDo we own your mortgage?â€
2. Your loan must have been sold to Fannie Mae or Freddie Mac before April 1, 2009.
3. You havenâ€™t already refinanced under HARP or you refinanced under the program between March and May 2009.
4. Your loan-to-value ratio must be higher than 80 percent. That means you have to owe more than 80 percent of what the home is worth. To calculate that, divide the amount you owe by the value of the property.
5. You havenâ€™t been late with a mortgage payment in the last six months. In the last year, you havenâ€™t been 30 days late more than once. Because the program will last through Dec. 31, 2013, thereâ€™s still time for borrowers to get on track.
6. You must benefit. Homeowners arenâ€™t going to qualify for HARP if they canâ€™t get a lower payment or a more stable loan, such as a fixed rather than adjustable rate.
No ceiling for some
One of the biggest changes to the federal refinancing program: How far underwater you can be. Thatâ€™s basically what bankers are talking about when they say loan-to-value ratio. And the good news is some mortgage holders will be eligible no matter how much they owe or how much the house is worth. For others, there are still ceilings. The details:
If you have a fixed-rate mortgage with a term of up to 30 years, thereâ€™s no maximum LTV ratio, meaning thereâ€™s not maximum amount you can owe on your home.
Have a fixed-rate, 31 to 40-year mortgage? You can only owe 105 percent of what the house is worth.
Does your mortgage come with an adjustable rate? As long as you didnâ€™t sign up to pay on it for more than 40 years â€“ or fewer than 5 â€“ you can owe 105 percent of what your house is worth.
Is it going to cost you?
Fees and closing costs are still around and will vary. HARPâ€™s latest changes reduce fees, however, and waive them for people refinancing for a shorter-term mortgage.
Borrowers refinancing for a fixed rate mortgage with a term of more than 20 years will pay total fees of 0.75 percent. Those fees used to be as high as 2.75 percent.
A HARP refinance also allows borrowers to include closing costs in the amount theyâ€™re borrowing.
You might also save money on appraisal costs because the new program wonâ€™t normally require a traditional appraisal but will rely on an automated model instead.
Whatâ€™s in it for the bank?
The new Home Affordable Refinancing Program waives requirements for something called lender representations and warrants. It means banks or other lenders are no longer responsible for any errors in your old loan.
Have a foreclosure? Bankruptcy?
The new HARP makes things a little easier for you. The standard waiting period has been removed for folks who have those blemishes on their credit histories.
Maybe you want to trade for a fixed rate loan. Say youâ€™re even willing to pay higher monthly payments now to avoid that ballooning interest in the fu-ture. Hereâ€™s what you need:
1. A credit score of at least 620
2. An income that covers more than half of your total debt.
3. Proof of your income and assets.
Where do you start?
When you apply for a refinance, youâ€™ll be required to provide bank statement, a drivers license, homeowners insurance information, pay stubs and W-2s. You might also have to come up with a few yearsâ€™ worth of tax returns
When can you apply?
Lenders will start taking applications around Dec. 1. The program is in effect through 2013, although thereâ€™s no guarantee todayâ€™s low interest rates will last that long.
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