Understanding HARP 2.0 And Its Requirements

by News Guy on September 28, 2012

Many people want to take advantage of low interest rates to refinance their mortgages, but cannot because the value of their home is less than what’s owed on the mortgage.  Responsible consumers who bought homes well within their means are now stuck with homes worth far less than the mortgage amount.

To help these responsible borrowers, the government rolled out HARP 2.0, a revamped version of the Home Affordable Refinance Program of 2009.  The rules of the program can vary by state, with Florida HARP 2.0 lenders having slightly different requirements than California HARP 2.0 lenders, so be sure to review the rules of your state before making any decisions.

The Program

The HARP 2.0 program allows homeowners who owe more than their mortgages are worth to refinance their home, even though they do not qualify for a traditional refinance.  Unlike the previous program, HARP 2.0 allows borrowers that are required to carry mortgage insurance to qualify for a refinancing, opening the program to a much larger group of borrowers.  The new mortgage originator does not have any responsibility for anything that happened on the first loan, making lenders much more comfortable with helping these borrowers.

The Requirements

In order to qualify for the HARP 2.0 program, there are some certain requirements that must be met.  The mortgage being refinanced must be owned or guaranteed by Freddie Mac or Fannie Mae and cannot have been previously refinanced under HARP.  The borrower must have remained current on the payments for the mortgage for the past 12 months and the current loan-to-value ratio must be greater than 80%.  Borrowers are required to have a credit score of at least 620 and must provide accurate documentation of their income.  Any borrower that is interested in taking advantage of the program should call a local HARP 2.0 lender to find out if they would qualify for the program under the rules of their state.

Choosing A Lender

Borrowers can choose any lender participating in the program to refinance their mortgage loan, so if they do not want to deal with the original lender, they do not have to.  You have the option of working with any broker or bank lender for your refinance so you should shop around to see what kinds of programs are being offered that you may qualify for.  A list of local lenders participating in the program can be found online by typing in your state and the type of lender you are looking for.

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