- What Is HARP?
- Benefits Of HARP Refinance
- Getting Started With HARP Refinance
- Obama Mortgage Program Overview
What is The Pittsburgh, Pennsylvania HARP Program?
Relief For Underwater Homeowners The Federal Housing Finance Agency, or FHFA, saw a need in the housing market to extend financing options to hard-working homeowners that needed a financial break. If the home was in your name and payments were current, the HARP program was a perfect outlet to lower your monthly payments.
With the revitalized HARP 2.0 in October 2011 helping even more homeowners today, it is crucial to speak to your lender about eligibility. HARP works by lowering your principal, the interest rate or other financial portions to save you several hundred dollars each month, depending on the property.
It is not necessary to search out specific loan officers that may deem themselves HARP representatives. This federal program is meant to help underwater homeowners through most major banks if they hold a Freddie Mac or Fannie Mae loan.
If you are unsure of your loan's origination, call (215) 437-0414 to a HARP mortgage lender. The government wants you to remain in your home to keep the economy and local community thriving toward success. You are not confined to working with just your lender. With the government's support, you are able to compare different interest rates with various lenders before settling on a refinancing option.
You May Be Eligible For HARP If:
- Verify Ownership - Your home loan is owned or guaranteed by Fannie Mae or Freddie Mac.
- Sold Date - Your loan was sold to Fannie Mae or Freddie Mac before May 31, 2009.
- Current On Mortgage - You are current on your mortgage payments.
- Payment History - You have made all of your mortgage payments on time in the last 6 months.
- No Mortgage Lates - You have had NO sixty (60) day late payments in the past 12 months.
- Loan-to-Value - You owe more than 80% of your home's estimated value.
You can check to see if your Pittsburgh loan is eligible for Pennsylvania HARP by CLICKING HERE, or feel free to call our HARP Approval Hotline at (215) 437-0414 to speak with an approved HARP Mortgage Lender near you.
Keep in mind that with the new updates to the Home Affordable Refinance Program, the government has made it possible for you to shop around for the best interest rate and deal vs. having to be tied down to your current lender.
Benefits of The HARP Program
Increased Financial Security
Once your loan is refinanced under HARP, the interest rate is typically lower and principal could be reduced. With each passing month, you decrease your debt and gain equity. Because your monthly payment is not as overwhelming as before, you have more financial security to put money into savings or toward the property's principal. You may find yourself out from the underwater property situation and increasing overall property wealth.
Pittsburgh Community Property Values in Pennsylvania
Many neighborhoods find their overall property values diminished by abandoned or rundown homes on each block. Through HARP financing, you and your neighbors can refinance and stay in your homes. With extra money available each month, everyone can improve their homes, such as adding a new coat of paint. Property values slowly rise with a caring community maintaining their homes. As property values increase, your equity grows into a lucrative investment.
Maximum LTV Thrown Out
HARP's initial launch did not help as many homeowners as it could because of its LTV limit. LTV, or loan-to-value, ratio is a comparison between your outstanding loan amount and current property value. Initially, the government set a limit at 125 percent. For example, a valued $100,000 property could only be refinanced for $125,000 under HARP 1.0. However, most homeowners had LTVs much higher than the maximum amount.
HARP 2.0 removed the LTV maximum, relieving homeowners and creating an influx of applications. There is a stipulation to the LTV maximum, however. HARP refinances homes with a fixed interest rate using the removed LTV ratio law. If you choose an adjustable loan, HARP only refinances if your LTV is under 105 percent. Adjustable rates are not often chosen by homeowners so this maximum has not been a concern.
Exorbitant fees associated with refinancing a property rivaled a new home purchase. Several thousand dollars typically exchanged hands just to change or transfer a home loan. HARP 2.0 reduces these closing costs and streamlines the refinancing process. For example, a full property appraisal is not required. HARP can use neighborhood estimates and historical calculations to approximate a value. Because of the removed maximum LTV, the value is not as critical as it was during the original HARP.
Second Home Relief
Investors felt the pain of the housing market with their second, or investment, properties. Because unemployment ran wild during the Great Recession, people could not afford the rent on an investor's second property. As a result, the investor had reduced income and struggled with his two mortgages. HARP 2.0 allows investors to refinance second properties along with their main residence. Keeping the housing market vibrant helps the community thrive and survive until unemployment subsides and economic promise kicks in.
Getting Started With The HARP Refinancing Program in Pennsylvania
This new Pittsburgh refinance program is intended to be as easy and streamlined as possible through the entire process. Even second mortgage subordination agreements and Mortgage Insurance contingencies are not posing as major road blocks.
Determine if your loan is with Fannie Mae or Freddie Mac:
Fannie Mae and Freddie Mac offer loan lookup tools on their websites to help you determine if your loan is owned or guaranteed by one of the companies.
Pittsburgh HARP Eligibility
Confusion usually reigned as HARP was unveiled. HARP 2.0 fixed several key points to make millions of people eligible for this critical mortgage lifeline. To be eligible for refinancing, you must qualify under certain conditions:
Contact Freddie Mac or Fannie Mae through their websites to verify your loan's origination. The loan needs to be directly owned through these entities or guaranteed on the paperwork. On the website, punch in your loan number to verify your eligibility. If the loan is not part of these two entities, it cannot be refinanced under HARP. You may find that your loan was sold to these two entities by reading your mortgage paperwork. If this is the case, any mortgages sold to the two entities before May 31, 2009 are eligible.
Minimum LTV Ratio
If you have equity in the property giving you an LTV of 80 percent or lower, you do not qualify for HARP. This program is meant for underwater homeowners looking for financial relief. An 80 percent LTV or lower makes you eligible for normal refinancing options available at almost every bank. Rates are extremely low, making a normal refinance cost effective for your particular situation. Allow other homeowners to benefit from funds meant for their underwater situation instead.
When the housing market was expanding at a rapid pace, some homeowners refinanced once a year to lower their monthly payments systematically. However, HARP funds are not available for refinancing more than one time. There is only one exception to this rule. HARP funds released between March 2009 and May 2009 may be refinanced again if it was associated with Fannie Mae loans. HARP 2.0 can be used to refinance these specific loans for a better overall package.
HARP helps people that are struggling, but specializes in homeowners that are diligently paying their monthly bills. You cannot have more than one late payment in the past year and the last six months must be paid on time. Current homeowners show good faith that they want to pay down their debt, but its becoming harder each month to afford all the necessities, such as groceries.
Patience Pays Off
HARP 2.0 is an extremely popular program helping millions of people. With the program ending December 31, 2015, you may be concerned about qualifying in time. Apply to the program through an online application or at your lender's facility. It can take as long as 6 to 8 weeks for an application to be evaluated and approved. Until you are contacted, pay your mortgage and maintain your home as best as you can. HARP has helped millions and can help you too.
Obama Mortgage Program Overview
If you are interested in reading a detailed overview of the HARP Mortgage Program, the following article will cover the history and purpose behind the Obama Administration's Home Affordable Refinance Program initiative.
Referred to as HARP, DU Refi Plus or the Obama Refinance Plan, the Home Affordable Refinance Program is a federal program of the United States, that was originally set up by the Federal Housing Finance Agency (FHFA) in March 2009 under President Obama's Making Home Affordable Program to help underwater and near-underwater homeowners refinance their mortgages.
Explanation Of How The New HARP Program Will Help Pittsburgh Homeowners
There were high hopes for the initial HARP Mortgage program that was launched under the Making Home Affordable Program in 2009 by the Obama Administration and set up by the Federal Housing Finance Agency (FHFA) as a means to help underwater and near-underwater homeowners refinance out of high interest rate loans or risky mortgage programs.
While it did help several thousand borrowers who fit the strict criteria to reduce their interest rates, lower their payments and get out of loans that could suddenly adjust the monthly payments upwards, the 125% negative equity ceiling did not allow millions of homeowners that had greater losses in property values to take advantage of the program.
In theory, the original HARP Mortgage Program was a good idea, except the massive decline in property values that followed the foreclosure and real estate crisis of 2006 - 2008 did not help the millions of struggling homeowners that the program was intended to.
The 125% loan to value restriction left a lot of good paying Pittsburgh mortgage holders out of the opportunity to refinance at the low market interest rates. If there are any knocks on the way the program was originally written it would have to be that the equity ceiling was a little short sighted.
The HARP Mortgage Program was updated in October 2011 to elimiate previous roadblocks that prevented otherwise qualifed borrowers from taking advantage of the refinance boom.
The most important change to the Home Affordable Refinance Program for Pittsburgh homeowners who were underwater on their mortgages or had little equity and were bound by mortgage insurance challenges was the elimination of the equity requirement. This change could help as many as 4 - 7 million more homeowners get payment relief while taking advantage of the historically low interest rates. The belief is that homeowners Pittsburgh will be able to add to an average savings of $3,500 a year and spend more on goods and services to directly impact the economy.
Who Qualifies for The HARP Program?
- The existing home loan must be purchased or guaranteed by fannie mae or freddie mac prior to May 31st, 2009.
- Existing home loan cannot be a loan that was previously refinanced through HARP.
- Mortgage payment history for 12 months may include one 30 day late payment over 12 months but no late payments over the last 6 months.
- The new HARP mortgage must provide benefit that includes: lower interest rate, lower interest rate and payments, reduced mortgage term and change from adjustable rate and interest only loans to a more stable fixed rate loan.
- When the new HARP mortgage payment is greater than the existing mortgage payment by more than 20%, income and credit are more important and will be factors in the electronically underwritten loan. The debt to income ratio cannot exceed 45%.
- All property types qualify. Single family residences, condos, townhomes, planned unit developments, manufactured homes and attached multi-family 1-4 units.
- All occupancies qualify. Primary residences, second homes and non-owner occupied investment and rental properties.
- HARP mortgages will be restricted to the new conforming limit for the county that the property is located in. Homeowners that last financed at 100% loan to value at the previous conforming limit will need to pay down the loan at close of the HARP mortgage to qualify.
- Homeowners with second mortgages qualify as long as the second mortgage holder agrees to re-subordinate and the new 1st position HARP mortgage does not exceed 125% loan to value. Second mortgages are not allowed to be paid off with the proceeds of the new HARP mortgage.
- Homeowners with private mortgage insurance qualify for the HARP mortgage. If the existing loan to be refinanced does not have private mortgage insurance the new loan will not require private mortgage insurance. If it does have private mortgage insurance the homeowner will need at least the same coverage that was on the existing mortgage. Lending professionals will help homeowners with the private mortgage insurance details and determining whether or not a homeowner has it currently. They will walk you through the HARP mortgage private mortgage insurance procedures.
With the elimination of the equity requirement for the HARP Mortgage, the most important factor in qualifying a homeowner for the program is the mortgage payment history. In the most recent 12 month period the HARP Mortgage allows one 30 day late mortgage payment with no mortgage late payments in the last 6 months.
Establishment of The Pittsburgh HARP Program in Pennsylvania
The Pittsburgh HARP Mortgage is geared to reward responsible homeowners that have made their mortgage payments on time but were caught up in a period of significant losses in property values and unable to refinance based on traditional underwriting guidelines.
The spirit of the HARP Mortgage and the recent guideline changes is to provide benefit to homeowners that lost a ton of value in their properties and now find themselves at above 80% loan to value for principal residences and above 75% for second homes and rental properties.
The new HARP Mortgage has to benefit the homeowner in one of the following ways:
- The HARP Mortgage Lowers The Monthly Interest Rate
- The HARP Mortgage Lowers The Monthly Interest Rate And Payment
- The HARP Mortgage Reduces The Mortgage Term
- The HARP Mortgage Provides A More Stable Loan Than The Existing Adjustable Rate Or Interest Only Loan.
As a reminder to Pittsburgh homeowners that are applying for the Pennsylvania HARP Mortgage it is important that they make all of their scheduled mortgage payments on time while they are waiting for their new loan to be funded. Whether it is a first or second mortgage those payments must be made on time and any lending professional that advises a homeowner to hold off on making scheduled mortgage payments is not advising homeowners properly and nor are they protecting the homeowners ability to qualify for the HARP Mortgage.
There are other noteworthy aspects of the new HARP Mortgage. Homeowners with second mortgages will still qualify when the existing first lien is refinanced with a new HARP Mortgage and the second loan holder agrees to re-subordinate. The Pittsburgh homeowner is not required to work with their existing lender to get the Pennsylvania HARP Mortgage.
It seems that some mortgage professionals are communicating this to borrowers which may be an attempt to keep the loans with them. Homeowners are free to choose whatever lending institution they want for the HARP Mortgage and are encouraged to compare mortgage lenders, interest rates and costs to determine the what company is the best fit for them.
Those homeowners with private mortgage insurance are eligible for the HARP Mortgage as well. It seems that some lenders and mortgage people have told homeowners that if their existing loans have private mortgage insurance they will not qualify for the HARP Mortgage.
If any lender that a homeowner is talking to says that they have to work with their existing lender or that private mortgage insurance disqualifies the homeowner from getting the HARP Mortgage, it is advised that they immediately find a new mortgage lending institution.
Pittsburgh HARP Mortgage Basics
This program was created under President Obama and is a program tailored to help homeowners that have negative equity in their homes due to the housing market crash. Unsure about what “negative equity” means? Negative equity means that you owe more on the mortgage than what your home is valued at. It’s a scary situation, but many borrowers found themselves in this situation with the financial crisis.
The HARP program specifically helps borrowers who owe more than 80% of the value of their home (this is referred to as LTV or loan to value). Refinancing with such a high loan to value under conventional or traditional loan programs would be difficult if not impossible by today’s lending standards.
The Pittsburgh HARP program is specifically tailored for borrowers suffering from negative equity does not have the same set of requirements or criteria as traditional or conventional loans.
Refinancing under the HARP program allows borrowers to get into the low rates of the current market. Did you know that rates have not been lower than where they are right now? Traditional mortgages make refinancing virtually impossible for homeowners that don’t have equity, but the HARP Program can help.
Traditional 30 year mortgages are great for many borrowers, but the downfall of these programs are that they pay very little of the loan balance down in the first ten years. Most of the monthly payment that you’re sending in gets applied to interest, meaning that after ten years on a 30 year mortgage your loan balance is going to be close to where it started.
The same is not true for 20 and even 15 year mortgages. In the shorter term mortgages the borrower will start to see a difference in the remaining loan balance in as little as 3-5 years; which puts them in a powerful position to start gaining equity in their homes.
The HARP program understands the benefit to short term loans and actually encourages borrowers to refinance into these programs. Usually the programs have lower interest rates than the 30 year mortgages, are fixed rate loans to provide stability, and will have the homeowner out their negative equity position much faster than a 30 year mortgage.
Occupancy and Property Types Accepted by Pittsburgh HARP
One amazing benefit of the program is that the HARP Mortgage Program allows for non-owner occupied investment homes and second homes in addition to primary residences. The only difference is that the loan to value ratio for the HARP Mortgage Program on investment properties and second homes is that LTV ratio starts above 75% as opposed to above 80% for owner occupied properties.
This is a really good thing for not only the borrowers but also the housing markets. Non-owner occupied properties whether it is a second home or investment property will always be walked away from before primary residences. From a homeowner psychology standpoint, there is no questioning this mentality.
People will always protect the homes they occupy over their vacation and rental properties. Although there is some evidence of lenders working on loan modifications for second home and investment property loans it does not seem to be as common as with homeowners living in their primary residences and experiencing financial hardships. Whether it is an owner occupied, second home or investment property, loan modifications are considered on the basis of documentable hardship and ability to repay the loan.
Investors and second home owners will not get the help they are looking for simply on the basis of being underwater on the mortgage. This makes the acceptance of non-owner occupied and second homes by the Pittsburgh HARP Mortgage Program significant because they will be able to take advantage of lower rates and a reduction in monthly outflow.
This may serve to protect renters living in properties that have a greater likelihood of slipping into foreclosure and may slow the numbers of investors and second homeowners that come to the decision to simply walk away from their homes.
The inclusion of the non-owner occupied properties by HARP addresses the situations of investors and second home owners that are also upside down on their mortgages and needing payment relief. It is advantageous to the housing market to not have a bunch of these mortgages walked away from and the houses abandoned. The costs to the bank would be huge if they all walked away. This decision only further contributes to depressed property values.
The property types that are accepted by the HARP Mortgage guidelines are consistent with Fannie Mae and Freddie Mac guidelines. That includes detached single family residents, attached 1-4 units, condos, townhomes, planned unit developments, and manufactured homes.
There is no limit to the number of properties financed under HARP Program Guidelines when the loan is underwritten electronically with the Desktop Underwriting System. In an alternative underwriting system called Loan Prospector also known as LP, there is a limit to 4 multi-family residences (1-4 units) when the property being financed as a HARP mortgage loan is a second home or investment property.
The enhanced HARP Mortgage Program goes a long way to help both homeowners looking for payment relief on their primary residences and investors on their second homes and rental properties.
Who is not Eligible for a HARP Mortgage?
Given all that is known about the Obama mortgage plan, here are a few instances where a loan is not eligible under the HARP Program:
- Pittsburgh, Pennsylvania homeowners that do not currently have a Fannie Mae or Freddie Mac Loan are not eligible for the HARP Mortgage. You can check with your current lender or competing lenders to see if your loan is owned or guaranteed by the two organizations above. Additionally, your loan must have been funded and delivered to Fannie Mae or Freddie Mac prior to May 31st, 2009.
- Homeowners that have already refinanced with HARP are not eligible to be refinanced HARP again.
- Homeowners must have a most recent 6 months of no mortgage late payments and a maximum of one 30 day late payment over the last 12 months.
- FHA, VA and USDA loans are government sponsored loans but are not eligible for refinance under the HARP Mortgage Guidelines.
- Homeowners that are in foreclosure are not eligible for a Pittsburgh HARP Mortgage. The HARP program is not intended to put a stop to the foreclosure process that has already started.
- The result of the loan must be one of the following or it will not qualify: 1) Lower interest rate 2) Lower monthly interest rate and payments 3) Shorter mortgage term 4) Refinance into a more stable loan from an interest only or adjustable rate mortgage.
- When mortgage payments increase by 20%, debt to income ratio must not exceed 45% or whatever the electronic underwriting system determines.
If you need help determining whether or not your loan is owned Fannie Mae or Freddie Mac, the following pages will connect you with a Pittsburgh HARP Mortgage Lender who will be willing to assist you:
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