The sad news is that a lot of people are in this situation and up until now, refinancing has been almost impossible for most who have an underwater home.
The federal government is in the process of expanding the original Home Affordable Refinance Program or HARP so that more underwater mortgage holders are able to refinance their homes and in some cases avoid foreclosure.
More people should be able to qualify for HARP II because there’s no loan to value limit. HARP I would only help you if you owed less than 125% of your home’s value in a mortgage. That meant a person with a home worth $100,000 that was mortgaged for $150,000 could not qualify for HARP I. That same person could qualify for HARP II.
There are some restrictions on who can qualify for HARP II. These restrictions include:
- Your mortgage must be owned by Freddie Mac or Fannie Mae (the federal agencies that underwrite mortgages).
- It must be a fixed rate mortgage such as a 20 or 30 year. Some refinancing for ARMS (adjustable rate mortgages) is available but it is limited to 105% loan to value.
- Your mortgage was issued before May 2009.
- You made your mortgage payments on time for the last six months.
- You did not miss more than one mortgage payment in the last year.
Lenders will begin taking applications for HARP II refinancing on December 1. If you or somebody you know has an underwater mortgage this program could help.
If this sounds confusing to you we are here to help. We can put you in touch with mortgage brokers that understand this process. They can see if you qualify for HARP.
Nobody should live with an underwater mortgage or go through foreclosure if they can avoid it.