Nationwide, 8.1 million borrowers who owe more on their loan than their home value have interest rates of 5.1 percent or higher, according to data analytics firm CoreLogic. In the past it has been difficult, if not impossible, for these homeowners to lower their mortgage interest rate. The new Home Affordable Refinance Program (HARP), introduced in 2009 and improved last month, now provides solutions for many homeowners who are underwater.
If you are current on your mortgage and have been unable to obtain a traditional refinance because the value of your home has declined, you may be eligible to refinance through HARP. HARP is designed to help you refinance into a new, affordable, more stable mortgage. When this program was announced in 2009, loan to value (LTVs) maximums were set at 125% meaning that if your property value was $100,000 the most you were able to refinance into a new mortgage was $125,000. Those caps have been removed in order to provide relief to a larger segment of homeowners.
You may be eligible to apply if you meet all of the following:
- Your mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
- The mortgage must have been sold to Freddie Mac or Fannie Mae on or before May 31, 2009.
- The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May 2009.
- You must be current on your mortgage at the time of the refinance with a good payment history over the last twelve months.*
- The current loan-to-value (LTV) ratio must be greater than 80%.
- Loan balance must be $417,000 or lower.
- You may not receive cash at closing.
How to get started:
Midtown Bank has been offering HARP refinance alternatives since 2010 and with recent expansion of the guidelines the program will now allow many who were unable to refinance previously, an opportunity to lower their monthly payments.
*Proposed changes would allow one late mortgage payment in the last 12 months as long as the most recent six months payments have been on time. It is our understanding that, if approved, this change to the program will be implemented in March 2012.
