HARP 2 is Slow, but You Don't Have to Refinance with Current Mortgage Lender

The Home Affordable Refinance Program phase 2 was suppose to be widely available in December of 2011, but Fannie Mae, Freddie Mac and mortgage lenders across the nation have not yet fully implemented the full HARP 2 guidelines designed to help underwater home owners refinance their homes at today’s historic low mortgage rates.

Home Affordable Refinance Program II (HARP 2) Progress Update

The delay in making the HARP 2 program widely available is that Automated Underwriting Systems (AUS) are still being updated for the loan approval process. An AUS is the process in which a mortgage lender inputs your information into a system that computes your risk factors and spits out an approval or denial based on guidelines used to qualify for a loan. Fannie Mae and Freddie Mac as well as many lenders across the nation have stated that their AUS systems will be up and running sometime in mid March 2012.

However, there are some mortgage lenders that have implemented some of the HARP 2 guidelines and have begun accepting applications for the mortgage product. One change that has been made includes the Loan to Value and Combined Loan to Value increases. Under the original HARP you were allowed to refinance up to a Combined Loan to Value of 125 percent, which means your first and second mortgages could add up to 125 percent of the home’s value. Under the HARP 2 guidelines you are now able to refinance, at participating lenders, up to 125 percent Loan to Value on your first mortgage and up to 200 percent Loan to Value on any additional mortgages.

The second change that many participating lenders have made include price reductions which makes it possible to refinance at today’s historic low rates. The price reduction does not mean that there are no closing costs associated with the loan. Price reduction simply refers to the price you pay to get a certain interest rate. The old HARP program would have hits associated to the rate based on certain criteria in upwards of 3 basis points which ultimately pushed the qualifying mortgage rate to less desirable territory. Hits associated with the HARP 2 program are less severe averaging 1 basis point or less which allows for a much lower mortgage rate than the original HARP program.

Currently the HARP 2 program is only available to home owners who have a mortgage that is backed by Fannie Mae or Freddie Mac and for primary residences. The borrower must also have a 640 credit score, does not have Private Mortgage Insurance, current on mortgage payments, a mortgage originated before June 2009 and did not take advantage of the first HARP program. There are still a lot of questions to be answered about the new HARP 2 program and a lot of changes to come to make this program beneficial for home owners who have kept up with their mortgage payments.

Additionally, it is not necessary to refinance your current mortgage with your current mortgage holder under the HARP 2 program.

By: Jeremy Redlinger | PRC Funding | NMLS #627335 | 763-957-0858 | Newhomemortgagemn.com

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