Are you one of the millions of homeowners across the country that is underwater on your home?  Is your interest rate hovering around 6% or 7% and you can’t reduce it?  Is your mortgage backed by Freddie Mac or Fannie Mae?  Well, you may be in luck.  To help out “Main St”, homeowners who are underwater on their loan can now refinance the Home Affordable Refinance Program.  As many homeowners know, the Obama Administration upgraded the Home Affordable Refinance Program to from HARP 1 to HARP 2.0.  The major difference between the first version and the second version of HARP is that the LTV ceiling of 125% has been lifted to now be an unlimited LTV.  That’s right – you can be underwater by 400% and still refinance.  There are some caveats though such as your loan must be owned by Freddie Mac or Fannie Mae.  You also must be current on your last 6 months of payments and can have only been late on 1 payment in the last 12 months.  In some instances you may not need to get a new appraisal!  This can potentially save you upwards of $400!

As of 6/15/12, with mortgage rates still below 4%, refinancing application activity has been quite hot.  Just to give you an example of rates: Current 30 year fixed mortgage rates are at 3.375%, 15 year fixed mortgage interest rates are at 2.750% and 5/1 ARM loan rates are at 2.125%. Good credit is necessary in order to receive these low mortgage rates with 0.7 to 1% origination fee.

Unlike an FHA Streamline Refinance or a VA Streamline Refinance (IRRRL), certain documents are necessary in order for a HARP loan refinance to happen.  Such documents include employment, income and asset verification and any other documents your lender needs to help fund the loan.  Other caveats include that you must have purchased your home before June 1, 2009.

Unlike the first version of the HARP program, HARP 2 has spurred the interest of millions of homeowners.  Because of all this interest in taking advantage of this incredible opportunity, lenders and banks are flushed with applications.  Underwriters have never been so busy trying to accommodate all the different loan requests.  It’s actually becoming a little bit of a problem in that the lenders and banks need to hire more underwriters to keep up with the constant demand of the HARP Loan process.  It’s only mid-June in 2012 and this program will last until the end of 2013.  That’s almost 18 more months of business for these underwriters.

The interesting thing is that the Obama Administration is proposing a HARP 3 program after the HARP 2 program expires.  The HARP 3 program has hinted that anyone with an underwater mortgage could refinance their home.  Don’t expect this to happen anytime in the near future as this is an election year and Obama needs to focus on more pressing items like raising more money than Mitt Romney to be elected for a 2nd term (sarcasm – yes).

Getting back to the issue at hand…to determine HARP eligibility, borrowers can fill out a form online that will determine whether or not they qualify for this program.

If you have questions about the HARP Loan process – like “what if Bank of America owns my loan…what does that mean for my HARP eligibility” or any other questions, feel free to read our HARP Loan frequently asked questions page that will hopefully leave you more knowledgeable and comfortable about pursuing a HARP refinance.  One question that I have been seeing a lot is the following: “Can I refinance if I have a 2nd mortgage?  Doesn’t the HARP program apply to just the 1st mortgage?”  The short answer is yes.  You just need to get the 2nd mortgage subordinated.  What does that mean? Well, when you refinance your first mortgage and there is a 2nd that is not being paid off, it has to be subordinated.  (With the HARP refinance program, you can only refinance your first mortgage).  That means that the 2nd mortgage lender agrees to remain in 2nd position.  What happens is when you pay-off your first mortgage, the 2nd mortgage then becomes a first position lien on title, so the new 1st mortgage company requires that the 2nd lien holder “subordinate” to them and remain in 2nd position.

Hope this information helps!