Did you buy your house in 2009 or earlier? Love your house and feel like there is nothing you can do because you are "underwater"?

Finally, there might be something you can do! Thanks to HARP 2.0, the program that Fannie Mae and Freddie Mac have rolled out., you can lower your interest rate even if your house is worth less than what you currently owe.

You probably just asked what exactly is HARP 2.0 and how do I benefit from this? HARP 2.0 is the second version of the Home Affordable Refinance Program (HARP). The goal of this program was to allow qualified people who paid on time, but underwater in their house, refinance and take advantage of the record low-interest rates. The thought, or hope, was that if you could lower your mortgage it would relieve some of the financial stress and make you more likely to not default on your home.

The first version that was released in 2009 had a Loan to Value cap at 125%. The major problem that came with the original version was that many people owed more than 125% of what the house was appraising for. So, fast-forward to March 19th 2012, and to the rollout of HARP 2.0. This Loan To Value (LTV) restriction has been removed and there is no cap on the LTV.

How do I know if my house qualifies?

The first step in the process is to figure out if your house has a mortgage that is owned by either Fannie Mae or Freddie Mac. There are a couple of ways to look this up. If you receive a credit report you can see by looking under the mortgage; there is a line that should say what type of mortgage you have. You may also look at your payment coupon and see who the loan owner is. The third and final way is to look up your current address at either Freddie Mac or Fannie Mae; these sites will verify if you mortgage happens to be owned by them or not.

So far you are probably thinking, "this is to easy, so what's the catch?"

You looked up your house and there it is; you have a Fannie or Freddie loan. If I were you, I would be thinking, "ok, so my house qualifies, but what is the lender going to need or want from me to qualify and what are the cost associated with it going to be, because right now this sounds way to good to be true!?!"

The truth is that qualifying for the mortgage is not that difficult at all. The easiest way to find out is to put an application in with me. Below are the 4 basic items that we are going to be looking at.

Set the refinance up and show that there is a net tangible benefit. This could mean lower the years on the loan, changing the loan from an ARM to a fixed term loan, but most of the time it is lowering the payment.
Your current mortgage will need to be in good standing; no 30 day lates in the last 12 months
Prove your income with 30 days of pay stubs
Verify any assets for reserves and cash to close
Depending on if either your loan is a Fannie Mae or Freddie Mac loan, the qualifying Debt to Income ratio, and number of months of mortgage payment reserves will be different.
Fannie Mae has taken a more aggressive approach and is allowing a higher debt to income ratio, where as Freddie Mac is looking at the loan more as a new mortgage and keeping the qualifying ratios in line at 45% of your total income vs your total debt.

So let me be your hero in 2012! We can save you money today!!