More on the HARP program

These are excerpts from Sunday's New York Times on the subjest of the HARP program.

With interest rates at historic lows, the expansion of a federal refinancing program could help more homeowners who owe more than their property is worth move out of higher-rate or adjustable loans into something more affordable and stable.

The biggest change to the plan, called the Home Affordable Refinance Program, or HARP, raises the debt limit at which such borrowers can obtain a new mortgage. Those who owe more than 125 percent of their home’s value are now eligible; the previous limit for many government programs was 97 percent to 125 percent. The percentage ratio is known as loan-to-value, or LTV. The government also reduced some fees.

While homeowners moving into fixed-rate mortgages will have no ceiling on their loan-to-value ratio, those who are sticking with an adjustable-rate mortgage will have a limit of 105 percent (ARMs are allowed if the initial rate is fixed for at least five years.)

You must meet three basic criteria to qualify for a HARP 2 refinancing:

¶Your mortgage must be owned by Fannie Mae or Freddie Mac, and must have originated on or before May 31, 2009. (Each has a Web site page that will check your address for eligibility.)

¶You must have been current on your mortgage for at least six straight months and have had at most one late payment in the last 12 months. If you are uncertain, check with your servicer or look on your statements for any late charges.

¶Your loan-to-value ratio must be above 80 percent, and you cannot have previously refinanced under HARP.

The next step is to visit your current lender’s Web site or office to start the discussion.

Some lenders started offering HARP 2 loans this month, while others will not begin until January. It will be fully rolled out by most lenders by mid-March.

Both Fannie Mae and Freddie Mac will waive many closing fees for owners refinancing into a 15- or 20-year HARP mortgage. This could save borrowers charges ranging from a quarter of a percentage point to two percentage points of the loan amount, though banks are free to set their own fees. But going to a 15- or 20-year mortgage from, say, a 30-year mortgage or an interest-only one in an effort to build equity faster could set off a closer review of your finances if your monthly payment increased by 20 percent or more.

Bottom line is that HARP could be helpful if the value of your home has decreased.