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Pathways Advisory Group, Inc.
Dustin Smith, CFP®  |
An extended period of low interest rates encourages refinance activity. This happened on a massive scale with home mortgages about five years ago. This kind of mortgage turnover can stimulate economic activity. This remains a goal of every new federal program. What is the problem? Lenders have limited incentives. Many homeowners have trouble qualifying for a refinance. And federal programs, including the original Home Affordable Refinance Program (HARP), have fallen short of objectives.
The most recent federal program, phase two of HARP (HARP 2.0), is supposed to remove some of the traditional “roadblocks” and improve on its predecessors. Here is a basic list of requirements:
• Your loan must have been sold to Fannie Mae or Freddie Mac prior to June 1, 2009 (click to determine if your loan is owned by either Fannie or Freddie).
• Your loan must be current (no missed payments in the last 6 months and no more than one missed payment in the last 12 months).
• This must be your first HARP refinance.
• You must owe more than 80% of your home value. There is no maximum loan-to-value. However, your lender may have different loan-to-value requirements (see “overlays” below).
• Participating lenders can apply their own specific requirements (“overlays”). This is where the “catch” may be. You may find that your lender either doesn’t participate in the program or limits participation by applying additional requirements (“overlays”).
The program will not apply to every “underwater” borrower, but there is a little more incentive for the “big guys” (Chase, Wells Fargo, Bank of America, etc.) this time around. Hopefully this will at least help a few of you.
If you think this program may apply to you, contact your servicing lender. If you are able to qualify, you will want to get started ASAP. Pease review this Q & A before contacting your lender.
