Lenders Struggle as HARP 2.0 Remains Unpopular in North Dakota
By: Michael Foster | November 19th, 2012
The Home Affordable Refinance Program (HARP) is a government program designed to help struggling homeowners who are underwater on their properties to qualify for a refinanced loan so that they can remain in their home and lower their monthly payments. About a year ago, the program was “rebooted” with no appraisal requirement and an unlimited loan-to-value requirement, meaning homeowners can qualify for a loan no matter how much they owe on their house. Since then, insiders and the media have called this new loan HARP 2.0.
Since the program was designed to help people who owe more than their houses are worth in markets where home values are plummeting or not going up, it was of little value to homeowners in North Dakota, where property values are increasing by as much as 16% in some markets. It is no surprise that North Dakota, along with South Dakota, has less interest in HARP 2.0 refinances than any other states. According to the Federal Housing Financial Agency (FHFA) North Dakota, saw less HARP 2.0 refinances than any other state, with only one HARP 2.0 refinance to a homeowner with an over 105% loan-to-value ratio. In total, there were 49 year-to-date HARP 2.0 refinances in North Dakota.
However, the program is still available and anyone with a Fannie Mae or Freddie Mac guaranteed home loan sold prior to June 1, 2009 in the state can qualify to refinance. Since there is no home appraisal required, homeowners can refinance more quickly and with lower closing costs than some other home loan products.
The biggest benefit to a HARP refinance is taking advantage of today’s record low interest rates. HARP 2.0 mortgage rates are as low as 2.25% for 5/1 ARM loans and as low as 3.1% for 30-year mortgages. A 15-year mortgage can be as low as 2.375%, meaning there are loan options on the market now that offer rates actually lower than the average rate of inflation. This means you can borrow dollars at today’s value and lock that in for 15 years, even if the rate of inflation rises precipitously and lowers the dollar’s value in the future.
Lenders will offer different rates and closing costs for HARP 2.0 loans, so it’s important to shop around for the right loan for you. Depending on your individual situation, you may find closing costs will differ by thousands of dollars from lender to lender. If you are considering refinancing an existing Fannie Mae or Freddie Mac loan and want to take advantage of the streamlined HARP 2.0 closing process, lower fees, and today’s lower interest rates even if you are not underwater on your home, it’s a good idea to shop around for the low rates and the most attractive loan terms.
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