HARP 2.0 May Soon Run Its Course

By E Singer



Rising home values are poised to offset the usefulness of HARP 2.0 as the program is scheduled to come to an end on Dec 31st 2015. This makes the need for HARP 3.0 all the more important in order to service all of those who have still been unable to refinance.

As home values continue to rise in 2014, the average homeowner’s loan-to-value (LTV) ratio continues to climb downwards. One of the implications of this is that it effectively erases much of the incentive that has been in place to refinance under HARP to begin with. Homeowner’s with low LTV ratios have a much easier time refinancing than those with high LTV ratios.

What the Future Holds For HARP

HARP was originally introduced in 2009 in order to help homeowners who were underwater on their mortgage. The stated goal was to help reduce the number of homeowners who would have to go into foreclosure by saving them money on their mortgage each month. Between 2009 and 2011 around 1 million Americans took advantage of the program.

Due to a number of restrictions that were placed on HARP, the program began to wane as the number of people eligible to refinance began to decrease. Then, in the beginning of 2012, HARP 2.0 was introduced which loosened some of the earlier restrictions and opened the floodgates to more refinancing.

For example, one of the important changes that was made under HARP 2.0 is that new applicants could have an unlimited LTV ratio. Though this allowed many new homeowners to refinance in 2012 and 2013, it’s become less important as LTV ratios across the board continue to fall.

The passage of HARP 3.0 in 2014 could finally allow all of the people who have thus far been unable to qualify to finally refinance to an affordable rate. An important feature of HARP 3.0 is that it may finally allow homeowners to refinance even if their mortgage wasn’t backed by either Fannie Mae or Freddie Mac.

HARP Eligibility Requirements

The ability to refinance mortgages that aren’t backed by either Fannie or Freddie would cause a noteworthy uptick in the number of new home refinancing applicants. Even as mortgage rates continue to climb from month to month, there are still large savings to be had by refinancing under HARP.

Of the 580,000 homeowners who remain eligible for HARP, mortgage analysts have concluded that homeowners would save around $150.00 a month on average. That is a lot of money especially when it’s accumulated month after month for years at a time.

So, if you’re interested in saving thousands of dollars every year on your mortgage with HARP, you’ll first need to make sure you qualify.

You may qualify for refinancing if:
- You’re current on your mortgage.

- Fannie Mae or Freddie Mac owns your mortgage and it was purchased sometime before May 31st, 2009.

- The mortgage you’re looking to refinance is your primary home, a single family second home, or if it’s a one to four unit investment property.

Remember even if you’re home wasn’t acquired by Fannie or Freddie, you’re not out of luck. HARP 3.0 could soon make it possible for you to refinance.



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