advantage-disadvantageSome have contacted us asking about some of the disadvantages and dangers of the HARP Loans program.  We were at first taken aback by this because some people viewed this program as a “too good to be true” government program.   Many were jaded and suspect that the government was willing to help the common homeowner with their mortgage and keep them in their homes.  After we spoke with them, those who qualified have never been happier.  Most homeowners are taking advantage of today’s mortgage climate by lowering their payment, reducing and locking in their rate.  (I say most homeowners are “lowering” their payment because you can actually raise your payment under HARP 2.  But 95% of people who use HARP 2 to refinance are saving hundreds of dollars each month.)

Well – we tried doing some research into this and we can’t really find any drawbacks except maybe one.  HARP 2 is limited in the fact that it only allows homeowners to refinance who have a loan backed by Fannie Mae or Freddie Mac.  Hopefully, there will be an updated program – HARP 3.0 – that allows for all homeowners who are underwater to refinance – regardless of who owns their note.

Other government streamline programs have done well such as FHA and VA.  Like HARP, these have had great feedback from the customer.  With HARP, I truly hope HARP 3 gets passed.   Here is what we know currently about who qualifies for the rumored HARP 3.0 program.  The main difference between HARP 2 and HARP 3 is that your loan doesn’t have to be backed by Freddie Mac or Fannie Mae.

Below are more guidelines to who would qualify under HARP 3.0.

  • A self-employed person who used stated income for the original mortgage and can verify their current income via federal tax  returns
  • A prime borrower who used a sub-prime mortgage because mortgage rates were lower and or fees were less as compared to a conforming loan
  • A Jumbo mortgage homeowner who lives in a high-cost area whose original mortgage was for between $417,000 and $625,500.
  • A wage earner who used a stated income and or stated asset mortgage for convenience
  • Sub-prime borrower who has paid mortgage as agreed and can verify income and assets
  • An Alt-A borrower whose FICO’s were low at the date of origination, but have since improved.

HARP 3 would help millions of homeowners and hopefully it gets passed soon so that homeowners can take advantage of today’s low mortgage rates.  The Fed has promised low rates till 2015 so hopefully they keep their word and homeowners will be able to continue to refinance.