HARP Extension

Good news for underwater homeowners. The HARP refinancing program has been extended in scope to help an even larger number of American homeowners to save money. The initial HARP program helped many – providing a conduit to help them to refinance despite the lowered value of their home. The ability to refinance saves homeowners money and helps put that money into the economy.  As of June 2011 FHFA HARP Program report, over 838,400 homeowners benefited from HARP. Still many homeowners were still stuck, as the program initially only covered borrowers with an LTV of 105%, and shortly after adjusted up to 125%.  But, with the huge hit on housing prices in recent years, many people faced even higher loan to value ratio, preventing them from finding a lender willing to make the loan.

The extended HARP program, often referred to as HARP 2, has no LTV limit.  If Fannie Mae or Freddie Mac own your loan, and you took out your loan prior to May 31st, 2009 you might have a new opportunity heading into 2012. The program is expected to be implemented, with lenders ready to make loans after March 19, 2012.

How does a HARP Refinancing Help? On a $400,000 loan, lowering the interest rate on a 30 year fixed rate loan with no costs, from 6% to 4%  saves a borrower approximately $489 per month.  Obviously the HARP refinance program under Obama is a huge benefit to a homeowner, and saves  $100s of thousands of dollars in interest over the life of the loan. The extension of HARP was announced October 24, 2011 by The Federal Housing Agency, along with Fannie Mae and Freddie Mac.  Given the looser lending guidelines provided by the HARP 2 extension, it is expected that millions of homeowners who weren’t able to refinance under the original HARP Program – will be able to do so now. Read the complete guidelines.

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