Home Affordable Refinance Program 2.0 (HARP 2.0)
- HARP 2.0 Key Considerations
- No maximum loan-to-value (LTV) ratio makes HARP 2.0 Program ideal for underwater borrowers
- Potentially no property appraisal report
- No minimum credit score or income verification required in most cases
- Saves borrowers money and time
- No borrower income limits
- Applies to investment properties
- Strict program requirements limits eligibility for most borrowers
- Borrowers must be current on mortgage
- Loan limits
- Program expires on September 30, 2017
- HARP 2.0 Program Overview
- How the HARP 2.0 Program Works
- HARP 2.0 Program Eligibility
- HARP 2.0 Borrower Qualification Requirements
- HARP 2.0 Program Costs and Fees
- HARP 2.0 Program End Date
- Related FREEandCLEAR Resources
The HARP 2.0 Program (Home Affordable Refinance Program) enables borrowers who are underwater on their mortgage to refinance. If your mortgage is underwater, meaning your mortgage balance is greater than the value of your home, it can be virtually impossible to refinance without using a refinance assistance program. The HARP 2.0 Program is designed to make it easier for borrowers who are current on their mortgage to refinance into a more affordable loan with a lower monthly payment. The main difference between a HARP 2.0 refinance and a standard mortgage refinance is that the HARP 2.0 Program does not apply a maximum loan-to-value (LTV) ratio, which means that you may be able to refinance even if you are significantly underwater on your mortgage. This also means that borrowers may not be required to obtain a property appraisal which enables more borrowers to refinance and saves them significant money and time. Additionally, HARP 2.0 does not require borrowers to verify their income or use a minimum credit score in most cases. The program's reduced borrower qualification requirements make it ideal for homeowners who cannot refinance using standard mortgage programs.
The first step with the HARP 2.0 program is to determine if your mortgage is eligible and you qualify for the program. There are many HARP 2.0 loan eligibility and borrower qualification requirements that prevent most borrowers from using the program today. We review program and borrower eligibility requirements in detail below.
Borrowers who are eligible for the HARP 2.0 Program apply through approved lenders such as banks, mortgage banks, mortgage brokers and credit unions. These approved lenders make sure that applicants meet program eligibility requirements and qualify for the loan according to HARP 2.0 borrower qualification policies. Even if your current lender offers the HARP 2.0 Program you are not obligated to work with that lender when you refinance and you should shop your mortgage business to find the mortgage with the best terms. Click on a lender in the table below or INTEREST RATES to contact lenders about the HARP 2.0 Program.
We review the key HARP 2.0 Program eligibility guidelines below:
Fannie Mae or Freddie Mac Must Own or Guarantee Your Loan
To be eligible for HARP 2.0, your mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac. Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) that provide capital to and buy mortgages from lenders. Borrowers do not obtain mortgages directly from Fannie Mae or Freddie Mac but in many cases your mortgage is sold to them and you continue to make your payment to your original lender. The majority of mortgages in the U.S. are owned or guaranteed by Fannie Mae and Freddie Mac. So even if you make your monthly payment to Wells Fargo, Chase or Bank of America there is a good chance that your mortgage is actually owned or guaranteed by Fannie Mae or Freddie Mac. You can use Fannie Mae and Freddie Mac's loan look-up tools to determine if they own or guarantee your loan.
Original Mortgage Closing Date
Your original mortgage must have closed on or before May 31, 2009. So if your mortgage closed after May 31, 2009 you are not eligible for HARP 2.0.
To be eligible for the HARP 2.0 refinance program borrowers must be current on their mortgage and not delinquent.
Borrowers cannot have any missed or late mortgage payments within the six months prior to applying for the HARP 2.0 program and no more than one late payment in the past twelve months.
HARP 2.0 Program Repeat Usage
Under most circumstances you cannot have previously refinanced your mortgage with HARP 2.0 so you cannot use the program multiple times.
Loan-to-Value (LTV) Ratio
The HARP 2.0 Program does not apply a maximum loan-to-value (LTV) ratio which makes it ideal for home owners who are underwater on their mortgage. It is usually impossible to refinance your mortgage if you are underwater on your home. Because the program does not use a maximum LTV ratio, lenders may not require an appraisal report which saves borrowers money and time. In cases where lenders can access a reliable property value estimate from Fannie Mae or Freddie Mac, called an Automated Valuation Model (AMV) value, a new property appraisal report should not be needed. If a reliable property value is not available through Fannie Mae or Freddie Mac a new appraisal report is required.
Please note that the no maximum LTV ratio rule only applies if you refinance an owner-occupied property and use fixed rate mortgage. The maximum LTV ratio for non-owner occupied properties or if you refinance into an adjustable rate mortgage (ARM) is 105%.
Fixed rate mortgages and certain adjustable rate mortgages (ARMs) are eligible for the HARP 2.0 Program. Borrowers cannot refinance into an interest only mortgage according to HARP 2.0 Program guidelines.
The HARP 2.0 program only applies to conforming loan amounts ($424,100 or below for a single unit property in most counties).
Type of Refinance
The HARP 2.0 Program only permits rate and term refinancings which means that the only terms of your mortgage that can change are your mortgage program, interest rate and mortgage length. In most cases HARP 2.0 refinance borrowers lower their interest rate but keep their mortgage term the same with their new loan. Cash-out refinancings are not allowed through the program.
Your original mortgage may have a prepayment penalty if you refinance with HARP 2.0 but your new mortgage should not have a prepayment penalty.
The HARP 2.0 Program applies to both owner occupied and non-owner occupied one-to-four unit properties and single unit second or vacation homes. Unlike most mortgage refinance assistance prorgams, investment properties are eligible for HARP 2.0.
We outline the HARP 2.0 Program borrower qualification requirements below:
Borrower Credit Score
HARP 2.0 Program guidelines do not apply a minimum borrower credit score making it ideal for borrowers who have experienced a drop in their credit score. Please note that although HARP 2.0 guidelines do not require a credit score some lenders may apply a minimum borrower credit score to meet their internal underwriting guidelines. Borrowers who are rejected by one lender due to a low credit score should contact other lenders to determine if they qualify for HAPR 2.0 as underwriting guidelines vary by lender.
Borrower Debt-to-Income Ratio
Technically, the HARP 2.0 Program does not apply a maximum borrower debt-to-income ratio although in practice most lenders use a maximum borrower debt-to-income ratio of 45%, which is slightly higher than many standard mortgage programs. The debt-to-income ratio represents the maximum percentage of a borrower's monthly gross income that can be spent on total monthly housing expense. The higher the debt-to-income ratio, the larger the mortgage you qualify for.
Please note that although HARP 2.0 does not require borrower income verification (unless your new mortgage payment increases more than 20%) or apply a maximum debt-to-income ratio according to program guidelines, most lenders confirm that borrowers have the financial ability to repay their new loan. This is typically accomplished by confirming the borrower’s on-time payment history and applying guidelines similar to the Qualified Mortgage (QM) criteria to ensure that borrowers can repay their mortgage.
Borrower Income Limit
Unlike some other mortgage assistance programs, the HARP 2.0 Program does not apply borrower income limits so borrowers cannot be disqualified from the program because they earn too much money.
Interest rates for the HARP 2.0 Program vary by lender. In general, HARP interest rates are higher than rates for regular refinancings. Borrowers should shop multiple HARP 2.0 lenders to find the mortgage with the lowest interest rate and fees.
Borrowers are required to pay standard lender fees and mortgage closing costs with the HARP 2.0 Program. Borrowers should not be required to pay any extra fees to apply for HARP 2.0. Borrowers should avoid lenders that charge extra fees, especially upfront fees, to refinance through HARP 2.0.
Private Mortgage Insurance (PMI)
According to HARP 2.0 guidelines, if your existing mortgage does not have private mortgage insurance (PMI), then you are not required to pay PMI on your new loan, regardless of your loan-to-value (LTV) ratio. If your existing mortgage has PMI, you are required to have the same level of PMI on your new mortgage. This rule applies to mortgages with both borrower-paid PMI and lender-paid PMI. You can contact your current lender to determine if you pay PMI on your existing mortgage. Additionally, if a lender declines you because you currently pay PMI you should contact other lenders about the HARP 2.0 Program.
HARP 2.0 expires on September 30, 2017. Fannie Mae and Freddie Mac intend to replace HARP 2.0 with another high loan-to-value (LTV) ratio refinance assistance program but borrowers who are eligible for HARP should move quickly to use the program before it ends