Tuesday, Fannie Mae and Freddie Mac unveiled lender instructions for the government's revamped HARP program, kick-starting a potential refinance frenzy across VA and nationwide. HARP stands for Home Affordable Refinance Program. The updated program is meant to give "underwater homeowners" an opportunity to refinance at today's low mortgage rates. In the two-plus years since its launch, HARP's first iteration helped fewer than 900,000 homeowners. HARP II, by contrast, is expected to reach millions. Lenders begin taking HARP II loan applications December 1, 2011. To apply for HARP, applicants must first meet 4 basic criteria :
If the above criteria are met, HARP applicants will like what they see. For HARP applicants, loan-level pricing adjustments are waived in full for loans with terms of 20 years or fewer; and maxed at 0.75 for loans with terms in excess of 20 years. This will result in dramatically lower mortgages rates for HARP applicants -- especially those with credit scores below 740. Some applicants will find HARP mortgage rates lower than for a "traditional" conventional mortgage. In addition, HARP applicants are exempted from the standard waiting period following a bankruptcy or foreclosure, which is 4 years and 7 years, respectively. These two items are inclusionary and should help HARP reach a broader U.S. audience. HARP contains exclusionary policies, too.
And, of course, HARP can only be used once. Fannie Mae and Freddie Mac will adopt slight variations of the same HARP guidelines so make sure to check with your loan officer for the complete list of HARP eligibility requirements.