With interest rates at historic lows, the expansion of a federal refinancing program could help more homeowners who owe more than their property is worth move out of higher-rate or adjustable loans into something more affordable and stable. You must meet three basic criteria to qualify for a HARP 2 refinancing:

  • Your mortgage must be owned by Fannie Mae or Freddie Mac, and must have originated on or before May 31, 2009. (Each has a Web site page that will check your address for eligibility.)
  • You must have been current on your mortgage for at least six straight months and have had at most one late payment in the last 12 months. If you are uncertain, check with your servicer or look on your statements for any late charges.
  • Your loan-to-value ratio must be above 80 percent, and you cannot have previously refinanced under HARP.

The plan, called the Home Affordable Refinance Program, or HARP, raises the debt limit at which such borrowers can obtain a new mortgage. Those who owe more than 125 percent of their home’s value are now eligible; the previous limit for many government programs was 97 percent to 125 percent. The percentage ratio is known as loan-to-value, or LTV. The government also reduced some fees.
By Vickie Elmer, Dec. 15, 2011 WSJ

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