HARP Changes to Help More Homeowners Refinance Who are Upside-down on Their Mortgage

In addition to an extension from its original expiration date of June 2012 to the new date in 2013, the Home Affordable Refinance Program, known as HARP, is also being changed to help more responsible homeowners who are trapped in an upside down mortgage.

With mortgage loan rates a record lows for years now, at around 4% for a 30-year fixed and 3.5% on a15-year loan, many homeowners have still not been able to take advantage because of the fallen value of their real estate, i.e. their homes.

Millions of Americans have continued to struggle to make their monthly mortgage payments, but have lived up to their responsible financial obligations, only to watch others shirk their responsibilities through bail-outs, bankruptcy and short-sell techniques which have all worsened the depress values of homes.

While these people would like to refinance at lower interest rates, they have been unable to do so because the value of their home has dropped below their current mortgage cost.

While the HARP program had allowed for a refinance of up to 125% of the current home value, for millions of Americans this was not enough, and would still require them to pay tens of thousands at closing in order to refinance.

Now the Obama administration has just announced some changes to HARP which address these individuals and should allow for a lot more people to refinance their homes.

The restructuring of HARP removes many of the limits, including the 125% cap, and the reduction or elimination of loan fees from Fannie Mae and Freddie Mac. Homeowners who now have mortgages that exceed the value of their homes, who are employed or have some other form of income, and who are current on their mortgage for the past six month or more, could qualify for a refinance under HARP.

The Federal Housing Finance Agency (FHFA), who regulates Fannie and Freddie, has estimates that as many as a million more responsible homeowners should be able to get refinancing for their mortgage under the new guidelines.

Homeowners looking to refinance under the new changes to HARP will have to wait until the start of 2012 when the changes will go into effect.