A Reboot to Mortgage Refinance
On October 25, 2011, President Obama announced changes to the Home Affordable Refinance Program (HARP) that may help more homeowners refinance their current mortgages even if the value of their home has declined.
There are new guidelines* for homeowners with loans owned by Fannie Mae and Freddie Mac that can help you start a dialogue with your servicer (the company who holds your loan and to whom you write your payment checks) or a local lender participating in HARP to see if you qualify for a HARP refinance loan.
- You must have originated your loan before May 31, 2009
- You must be current on your mortgage payments, and have not made a payment more than 30 days late during the past year
- You must demonstrate the ability to continue making payments on the loan (demonstrate that you have a job or other consistent source of income)
- Your loan must be owned or guaranteed by Fannie Mae or Freddie Mac
- You must owe more on your mortgage that your home is worth (see LTV definition below)
- A refinance must help the affordability or stability of the loan (this means the refinance must make the loan either more affordable, or make the payments more consistent over time)
What is LTV?
Homeowners who are “underwater” means their LTV (Loan To Value) is more than 100%. The amount of the current mortgage is MORE than the value of the home.
Example: You owe $130,000 on your mortgage (this is your loan amount) yet the value of your home is $100,000 (this is the current value of your home) Your LTV is 130% (you owe $30,000 more than your home is currently worth)
*Final information and details are expected to be announced in mid-November, 2011. Eligibility criteria are for guidance only, contact your servicer to see if you qualify for HARP.