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Loan refinance programs extended

HARP 2.0 refinance loan programs were recently extended. The program was initially set to expire Dec. 31, 2013. On April 11, the Federal Housing Finance Agency announced they directed Fannie Mae and Freddie Mac to extend the program through the end of 2015.

With so many government programs with acronyms, it’s tough to keep thing straight. HARP stands for Home Affordable Refinance Program. As a mortgage loan originator here in Eagle County, I am glad to see the continuation of this loan program. I have seen firsthand how the program helps homeowners refinance loans that are upside down or underwater. Or to put it in more simplistic terms, the program has helped countless Eagle County homeowners refinance their mortgages when they owe more than their home is worth.

There are variables to the loan program and certain criteria must be met in order to be eligible. First of all, Fannie Mae or Freddie Mac must own the current note or debt to the home.

Secondly, Fannie or Freddie must have purchased the loan prior to June 1, 2009. HARP 2.0 is only eligible for borrowers for one refinance. There are some exceptions for Fannie Mae loans that were refinanced under the HARP program between March and May of 2009. Both entities have search tools on their websites for borrowers to determine if their loan is eligible. This is a good starting point for borrowers to determine if they are the end investor on their loan and if the June 1, 2009, deadline is met.

Assuming the loan is eligible, it has to have a loan-to-value greater than 80 percent and the mortgage payments must have been current for the last 12 months. Borrowers still have to qualify for the loan in terms of income, employment and credit. Once that is determined, there aren’t too many other restrictions with the particular loan programs through Fannie and Freddie.

Secondary and investment properties are all eligible. Loans that currently have mortgage insurance are eligible, and the existing mortgage insurance premium is transferred as is. Most all property types are eligible.

The benefit of the HARP 2.0 loan program is that borrowers are able to refinance existing loans into new ones at current interest rates. Current mortgage interest rates are at historically low levels.

Mortgage insurance is not required despite lack of equity unless it’s already in place on the existing loan. Hefty fees are not tagged on the refinances either. Interest rates for the programs vary from lender to lender and based on some of the criteria with the loan, but as referenced HARP 2.0 interest rates are still at being offered at historically low levels.

Putting any opinions of Fannie Mae and Freddie Mac aside, the loan programs have significant benefits. I have seen borrower’s refinances in to lower rates by 2 or more percentage points. Borrowers are able to reduce their monthly debts and interest owed on the existing loan by staggering figures. Such refinances are helping keep Eagle County homeowners in their homes and helping to put more money back in to our local economy. Thus, I for one am glad to see the continuation of this government loan program.

William A. DesPortes, of Central Rockies Mortgage Corp., can be reached at 970-845-7000, ext. 103 or william@dsmortgage.org.


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