HARP 2.0: The Basic Benefits

HARP 2.0, the Home Affordable Refinance Program, was updated at the end of 2011 and officially put into effect during March of 2012. This program was created to help homeowners, primarily those who are underwater, refinance to the low mortgage rates available today.

Borrowers will recognized a benefit from HARP 2.0 in that the refinance must result in one of the following: a reduction in the mortgage interest rates, a replacement of an ARM with a fixed rate mortgage, a reduction in the amortization term of the original mortgage or a reduction in the monthly principal and interest payment of the first lien mortgage (for hard hit areas). Many borrowers will see the equity return to their property at a faster pace with a HARP 2.0 refinance.

HARP 2.0 can be used for one to four unit primary residences, one unit second homes, one to four unit investment properties. With HARP 2.0, even investors can obtain the benefits. The final refinance proceeds must be used to pay off the original mortgage, as well as, pay related closing costs and prepaid/escrows not to exceed the lesser of 4% of the current unpaid balance of the original mortgage or $5,000. The borrower or any other payee cannot receive any funds in excess of $250.

Loan to value caps have been removed with HARP 2.0 for fixed rate mortgages. The maximum loan to value ratio for adjustable rate mortgages (ARM’s) is 105%. Minimum loan to values are currently set at 80%, but are scheduled to be removed in January, 2013, according to Freddie Mac.

HARP 2.0 is available for borrowers who have loans that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009. This program has helped many underwater borrowers refinance to historically low mortgage rates, thus, saving them a good portion of money. There are many more borrowers who need to be reached so that they, too, can refinance through HARP 2.0. Some may have been previously denied once or several times, but may now be able to find a lender for approval. The online form is available for this purpose, to provide borrowers with more information about HARP 2.0 and to help borrowers find a HARP approved lender. This process does not require a social security number, but will return a response almost instantly.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at about a 1 point origination fee.