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What is HARP 2.0 and Do I Qualify?

By on April 25, 2012 in Mortgage

What is HARP 2.0 and Do I Qualify?If you are underwater on your home mortgage, meaning you owe more to the bank than the home is worth, it`s nearly impossible to refinance to take advantage of low interest rates and lower your payment. However, the HARP 2.0 plan gives hope to some underwater borrowers.

What it is

HARP is an acronym for the Home Affordable Refinance Program, a government program that allowed people who were underwater on their mortgages to refinance if they met certain criteria.

HARP 2.0 is a newer, expanded version of the program. The main differences between HARP and HARP 2.0 are that, under HARP, your loan balance had to be no more than 125 percent of the value of your home; HARP 2.0 eliminated that cap. HARP 2.0 also eliminated some of the fees, including appraisals and underwriting fees, needed to refinance.

The original HARP program sought to help up to 5 million underwater borrowers, but less than 900,000 had signed up as of Aug. 31, 2011. In October 2011, President Barack Obama announced the changes to HARP to make it available to more people.

HARP 2.0 became available to borrowers with a less than 125 percent loan-to-value ratio in December 2011. Those whose loan-to-value ratio exceeded 125 percent became eligible in the first quarter of 2012.


Just because your home is underwater does not mean you automatically qualify for a refinance under HARP 2.0. You must still meet several requirements.

The first requirement is that your loan must be held by either Fannie Mae or Freddie Mac, the quasi-governmental agencies that buy mortgages after they have been originated by banks and other lenders and it must have been sold to tone of those agencies before June 1, 2009.

Most conventional mortgages are sold to one of these agencies, so this likely won`t be a problem. However, you can check to make sure your loan is owned by one of these agencies by going to their websites.

Next, you have to be current on your mortgage payments. That means no late payments, or none that are more than 30 days overdue, for at least the past six months and only one late payment within the past 12 months. So if you are behind on your mortgage and facing foreclosure, the HARP 2.0 program will not help you.

The third big requirement is that you cannot have previously refinanced through HARP. Even if your refinance was under the previous version of HARP, you will not be eligible under the new version.

Lenders can also add their own requirements to the refinance, called overlays. For example, one overlay a lender might impose is a minimum credit score.

Lenders also are required to verify income, employment and credit history.

HARP 2.0 is not a mortgage modification program. It will not reduce the amount of your loan. However, it should allow you to refinance at a lower interest rate, which may lower your payments. If you want an idea of what your payment might be, find a mortgage calculator online and plug in your loan amount and expected interest rate to estimate your monthly payment.

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