If you’ve been paying your mortgage diligently, slowly seeing your roof disappear under water, and didn’t see any light at the end of the tunnel — your wait may be over! Many of us struggled between keeping our mortgage current while watching interest rates fall, only to be excluded from any refinancing options because we were “too far underwater”. No longer….

Carrie Bay over at DSNews reports on the new HARP modifications which will help another round of homeowners previously locked out of the program due to lender stipulations and the dreaded LTV cap (Loan To Value):

Fannie Mae and Freddie Mac have released highly anticipated guidelines for the revised Home Affordable Refinance Program (HARP). Both GSEs have posted details of the program modifications and procedural changes on their respective business sites for mortgage servicers to follow (Fannie’s, Freddie’s).

Among the key program revisions, the GSEs have eliminated or raised the loan-to-value (LTV) cap, and relaxed representation and warranty stipulations – changes that officials expect to at least double the number of homeowners with a HARP-refinanced mortgage. Since the program was launched in 2009, just under 900,000 borrowers have participated.

Negative equity typically excludes a homeowner from refinancing through traditional channels. Removing previous LTV ceilings will allow homeowners who are severely underwater due to plummeting property values to take out new loans at today’s lower interest rates. There are, however, some LTV conditions depending on loan type.

There are no LTV restrictions for fixed-rate mortgages with terms up to 30 years, including those with terms of 15 years.

For fixed-rate loans with terms between 30 and 40 years, LTV is limited to 105 percent. Likewise, a 105 percent LTV cap has been placed on adjustable-rate mortgages (ARMs) with initial fixed periods of five years or more and terms up to 40 years.

Any borrower with an LTV ratio below 80 percent is not eligible for HARP.

So what does this all mean for you?

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Well, it means shortly, you should see revised programs come out from your lender, and a new slew of solicitations to refi into an already super-low interest rate. Keep in mind you will still have to be current on your mortgage and can have only missed one payment in the last 12 months to qualify.

Do you have plans to refi? Let us know how it goes!


– Carrie Bay,

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