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HARP Now Helping More Borrowers Refinance their Homes

January 13, 2012 | Mortgage Loans | No Comments

If you are looking to refinance your home but can’t because you are underwater (you owe more than your house is worth), you may be able to now refinance via changes made to the Home Affordable Refinance Program (HARP) announced last October.  

The changes where made by the Federal Housing Finance Agency, Fannie Mae and Freddie Mac with input from lenders, mortgage insurers and other industry participants.

Fannie Mae and Freddie Mac claims they have helped about 9 million families refinance into a lower cost mortgage or a more sustainable mortgage product. About 10% of those helped was via HARP, which allows borrowers to owe more than their home is worth in order to take advantage of low interest rates and other refinancing benefits.

HARP will continue to be available to borrowers with loans sold to the Enterprises on or before May 31, 2009 with current loan-t0-value (LTV) ratios above 80 percent.

The new program enhancements address several other key aspects of HARP including:

  • Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
  • Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
  • Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;
  • Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and
  • Extending the end date for HARP until Dec.

 

A very important feature of these changes is the encouragement, via elimination of certain risk-based fees, for borrowers to use HARP to refinance into shorter-term mortgages.  Additionally, borrowers who owe more on their home than its worth will be able to reduce the loan balance quicker if they take advantage of today‚Äôs low interest rates by shortening the term of their mortgage.

For more information view this PDF released by FHFA.gov.

 

 

 

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