What is a HARP 2.0 Loan?

In response to the sharp drop of home values, the Home Affordable Refinance Program (HARP) was established in 2009 to help homeowners refinance homes whose value dropped below the amount the homeowner owed. In Oct 2011, the government made the decision to keep the program active until Dec 31, 2013 and changed the program so that it could benefit more home owners, giving it the new term, HARP 2.0.

Benefits of a HARP 2.0 Loan

  • Low interest rates – Interest rates have dropped greatly in the last couple of years, making this a great time to refinance your home. The HARP loan program lets you take advantage of the new interest rates even if you owe more than your home is worth. No appraisal – If your home can be assigned an automated value, then you won’t have to pay to have your home appraised. No cap on fixed loans – If you are refinancing with a fixed rate loan, the new program has eliminated a cap on the Loan to Value (LTV) percentage.
  • Lower mortgage payments – the whole purpose of the HARP loan is to help you get a lower interest rate and a decrease in the amount that you pay each month on your mortgage. It does not decrease the amount that you owe, however.
  • More affordable payments – You can take advantage of the HARP mortgage program if your new payments are going to be lower than your last payments or will be more stable such as going with a fixed rate loan.

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HARP Requirements

  • In order to qualify for the HARP program, your loan must be owned by Fannie-Mae or Freddie-Mac. If you are not sure whether your loan is owned by Freddie Mae or Freddie Mac, you can contact your lender.
  • Up to date payments – You have to be able to show that your payments for your mortgage are up-to-date and that you have consistently been paying your mortgage for at least the last 12 months.
  • Proof of financial stability – In order to qualify for the HARP loan program you have to prove that you can afford the payments of the new refinance loan.
  • Cap on adjustable rate loans – The HARP mortgage program does set a cap of 105% for the LTV on adjustable rate loans that you will need to meet in order to qualify for the program.