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The Home Affordable Refinance program 2.0 of 2012

What is HARP 2.0?

The HARP 2.0 plan is a newer version of the home affordable refinance program which was updated 5 months ago. It has been specially designed to allow underwater homeowners in refinancing their homes to significantly reduced rates of interests and better terms. Borrowers whose home values have declined and currently owe more on their properties than their actual worth may benefit with HARP 2.0.

Who is eligible for the HARP 2.0 Plan Of 2012?

To be eligible for the HARP 2.0 program, borrowers need to meet the below mentioned conditions

  • Fannie Mae or Freddie Mac must have owned or guaranteed the mortgage on or before 31st May, 2009.
  • Applicant should be current on existing home loan and must not have missed any payment for last 6 months. Payments which are overdue by more than 30 days are called “late” or “missed” payments.
  • Only one late payment during the past 12 months is permitted.
  • Borrower must not have refinanced with the HARP schedule earlier or else he will get disqualified. The HARP 2.0 mortgage plan is only available for borrowers who are out to refinance for the first time.
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The Home Affordable Refinance Plan 2.0 – Enhancements to HARP

In an effort to reach out to more financially struggling homeowners, the federal housing finance agency (FHFA) announced a series of changes to the erstwhile HARP. Accordingly, Fannie Mae and Freddie Mac were directed to amend the rules and regulations so that more number of eligible borrowers could benefit by refinancing their existing mortgages at lower interest rates. To that effect, the latest Home Affordable Refinance Program schedule offers plenty of options to all eligible homemakers who have Fannie Mae or Freddie Mac backed home loans with an acceptable monthly payment history and whose home prices have fallen.

You may consider taking advantage of certain enhancements that apply to the HARP 2.0 initiative. Some of the HARP 2.0 requirements are as follows:

  • There will be no need to pay closing costs if you are refinancing to shorter loan duration. Even for the rest of the borrowers, some risk based fees have been lowered.
  • LTV limit of 125% for fixed rate home mortgage loans with terms of 30 years or less ceases to exist.
  • In a majority of the cases, no new home or property appraisals will be required.
  • Investment properties or second homes can qualify for the updated HARP refinance program. However, the rates of interests and fees applicable will be different.
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Thus, the HARP version of 2012 will help homeowners to reduce their monthly installments as well as enable them to secure a more stable and steady mortgage product.

To sum it up in brief, for HARP 2.0 qualifications:

  • 125% LTV mortgage valuation capping has been removed
  • Borrower must have good payment history for last 6 months
  • Applicant must be considering HARP refinance for the first time

Benefits Offered By A HARP 2.0 Refinance Loan

  • Underwater homeowners have the opportunity to get access to substantially lower mortgage interest rates.
  • No new home appraisals will be needed to be undertaken for refinancing with the new HARP plan.
  • Borrowers can roll mortgage insurance charges for current home loan into the new refinance loan obtained under the HARP 2.0.
  • As Fannie Mae and Freddie Mac will keep on making adjustments on interest rates provided for the new HARP refinances, the rates could be much better as compared to those offered on other confirming loans. Besides, one may even compare mortgage rates being extended by several lenders so as to obtain a competitive interest rate.
  • Homemakers have the option of choosing loan terms depending on their financial situations. Consequently, any borrower can shift from an existing 30 year mortgage to new fixed rate mortgage with loan duration of 25 years.
  • The entire procedure for getting a HARP 2.0 home refinance loan could be very much similar to the one which applies to traditional refinancing.

Harp 2.0 Guidelines

  • There are no restrictions relating to LTV or CLTV (earlier 105%) especially on fixed rate mortgages.
  • Reduction in charges for Loan Level Price Adjustments (LLPAs) will make interest rates competitive.
  • To refinance loans with shorter amortization periods (less than 20 years), borrowers will no longer be required to pay fees for LLPAs as these have got completely eliminated.
  • If applicant has been current on monthly mortgage installments for the past 6 months with a single payment default before that, he will not be needed to undergo the process of income verification. But income verification could be required if new payment, which include principal and interests, exceeds by 20% than what is being paid currently. Hence, borrowers, who are self employed or who are regular on their existing monthly installments but do not meet the current requirements, may determine their eligibility for the HARP 2.0.
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