HARP for 2nd Homes, Income Properties
- Kirk HaverkampOctober 27, 2012 - MortgageLoan.com
You probably knew that primary homeowners can refinance their underwater or low-equity mortgages through HARP, the Home Affordable Refinance Program. What you may not have realized is that HARP is now available for other types of properties as well.
Specifically, you can now use HARP to refinance a mortgage on a second home or certain types of investment properties as well.
The “HARP 2.0” changes that took full effect last spring greatly expanded the eligibility guidelines for mortgages that could be refinanced under the program. The most prominent of those was lifting a negative equity cap so that mortgages could be refinanced regardless of how far underwater they were. However, there were a number of other changes as well, and expanding eligibility to vacation homes and investment properties was one of them.
To qualify, vacation or second homes must be a single unit, although condominium units are eligible. Investment properties may be from one to four units, and it’s not necessary for the borrower to be residing in one of them.
It also doesn’t matter if one of the homes used to be a primary residence, but is now a second home or investment property.
You still have to meet the other HARP criteria, the main one being that the mortgage must be backed by either Fannie Mae or Freddie Mac. You also have to meet the usual credit and income criteria – including being able to show two months of liquid reserves if refinancing an owner-occupied home and six months of reserves for an investment property.
Other than that, it doesn’t matter how much the property may have fallen in value, as long as you’ve remained current on your mortgage payments. Your loan balance can be twice as much as the property is worth and you can still qualify. In fact, appraisals are not even required in most cases under HARP 2.0.
Can refinance more than one property
One question that some have is whether they can do a HARP refinance on a second home or vacation property if they have already gone through HARP to refinance their primary residence. The answer is yes – the only restriction of this type is that the mortgage must have been originated before June 1, 2009, which basically limits you to one HARP refinance per property.
You are not limited to refinancing with your current mortgage servicer, but can refinance with any lender participating in HARP. Some borrowers who have private mortgage insurance (PMI) may find it difficult to find a new lender who will accept that insurer, so your lender options may be more limited in that situation.
One of the other changes that was made with HARP 2.0 is that the standard waiting period of seven years after a foreclosure or declared bankruptcy before you can qualify for a mortgage, normally required by Fannie Mae and Freddie Mac, has been waived. That’s no guarantee you can get a HARP refinance, but if you ran into financial trouble or lost another property during the downturn, you’re no longer automatically excluded from the program for other properties you might still have.
First published on MortgageLoan.com at: http://www.mortgageloan.com/harp-2nd-homes-income-properties-9277