How can HARP 2.0 help me?
With the announcement of the HARP revamp, dubbed HARP 2.0, the opportunity to refinance underwater borrowers has a chance to affect 11 million homes. However, this is a lender assumed risk; it isn’t necessarily a no-risk situation.
Therefore, guidelines and qualifications have been put in place to ensure a profitable, yet affordable program to get people into a better refinance rate for their 100% or higher LTV homes. In order for you to refinance your underwater home mortgage, there are a couple of areas that you need to qualify with, they are listed below.
Is Your Home With Fannie Mae or Freddie Mac?
This is the first hurdle a homeowner must pass. Your home must have been securitized with Fannie or Freddie. And not only that, but it has to have been done prior to May 31st, 2009. If you’ve jumped over this first hurdle and are still running towards a HARP 2.0, the restrictions get more lax. Is my loan Fannie Mae? Is my loan Freddie Mac?
Does the loan to value ratio matter for HARP 2.0?
As opposed to the first incarnation of the HARP program which had a loan to value (LTV) limit of 125%; meaning the loan could not exceed 125% of the value of the home; the new HARP 2.0 has no LTV limit. Credit, debt-to-income ratio, employment history, and other qualifying requirements will be looked at by each individual lender and approved according to their company’s guidelines for the HARP 2.0 program. Those that stayed up on their credit, are not swamped with debt, and show proof of sustainable income are in the clear and can move into the next category.
Do I need to have a perfect mortgage payment history for HARP 2.0?
Not necessarily. However, you should not have any late payments in the previous six months, and you can only have one late payment in the past twelve months.
Is there a minimum credit score needed to re-qualify for HARP 2.0?
There is a minimum credit score of 620 in order to qualify for a HARP 2.0 loan. This is the middle score of the three reporting agencies of credit (Equifax, Experian, TransUnion). So if you have a 689 Equifax score, a 723 Experian score, and a 645 TransUnion score, you’re reportable credit score for mortgages is 689. The high score cancels out the low score and you’re left with the middle score. So if you have one of your credit scores below 620, don’t worry, as long as the other two are higher you qualify for the new HARP 2.0.
I passed all of the qualifications, now what?
So you made it to the end of the race: your mortgage is owned by Fannie Mae or Freddie Mac, you have a perfect or close to perfect payment history for your mortgage in the past twelve months, your payments are less than 20% more expensive than the prior amount or you re-qualified for a new HARP 2.0 loan. You’ve saved your home and made things more affordable in the long-term.