As the economy was struggling to regain its footing toward the end of the last decade, Congress passed the initial Home Affordable Refinance Program, or HARP, to help homeowners refinance their mortgages and thus reducing their monthly payments even though they owed more than their home was currently worth. Conventional refinance guidelines ask that the refinanced loan be no greater than 90 percent of the current market value of the property. Without the necessary 10 percent in equity a refinance is not possible. Mortgage rates had begun to drop but millions couldn’t take advantage of the lower rates due to valuation issues. HARP addressed this valuation issue by allowing the homeowners to refinance if the mortgage was as high as 125 percent of the current market value. While that helped, there were millions more that were still shut out of the refinance bonanza.

Enter HARP 2.0. In 2012, an updated version of the original HARP program eliminated the need for an appraisal altogether. That means the 125 percent loan limitation was eliminated and there was no regard for the current value. Those that attempted to take advantage of the original HARP program only to find out they couldn’t qualify because of the appraised value may not know they can reapply for the newer, updated version known as HARP 2.0.

HARP 2.0 requirements are minimal but there are some specific rules that must apply. The first is the loan must have funded prior to June 1, 2009. This date attempts to address the outstanding mortgages that were most affected during the downturn. Next, the loan must be owned by either Fannie Mae or Freddie Mac. Both have places on their websites where you can enter a property address and borrower name to see if the mortgage is in fact owned by either Fannie or Freddie. And if the borrowers have moved and no longer occupy the property but still have a mortgage on the home, the HARP 2.0 program can be used by a non-occupied borrower.

Millions have taken advantage of HARP 2.0 due to these changes and there are many more that could really benefit with this special program. If you’ve applied for a HARP loan prior to the introduction to HARP 2.0 and were turned down, it’s time to take another look. Rates are still low so don’t let them get away and call your loan officer to see if HARP 2.0 is an option. Chances are, it most definitely is.

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