Conforming mortgages have a loan limit of $417,000 for a single family dwelling. Some counties in Washington, such as King, Pierce, Snohomish and San Juan, qualify for an additional higher limit known as "high balance" or sometimes called "conforming jumbo". In the greater Seattle area, the current high balance conforming loan limit is $417,001 to $506,000. (NOTE: FHA's high balance loan limit in greater Seattle is $567,500).
High balance conforming mortgages may qualify for HARP 2.0, which allows home owners to take advantage of today's lower rates and refinance regardless of how much equity their home has lost.
Here are some basic pointers for a high balance HARP 2.0 refi:
- existing mortgage must be securitized by Fannie Mae or Freddie Mac. This is different than who you make your mortgage payments to. If when you obtained your mortgage, it was considered a jumbo/non-conforming (vs a high balance conforming), then odds are, it's not a Fannie/Freddie mortgage.
- existing mortgage must have been securitized prior to June 1, 2009. This is different than when you closed your existing mortgage. Securitization often takes place weeks or even a few months after the mortgage is closed.
- maximum loan amount capped at current high balance loan limits. In greater Seattle, this is currently $506,000. It's possible to currently have a true high balance conforming mortgage at a higher loan amount since they were previously at $567,500 and rolled back to $506,000 recently. HARP 2.0 is limited to current conforming loan limits. A cash-in refinance may be a consideration for those home owners with those loans who want to take advantage of HARP 2.0.
- no maximum loan-to-value unless your new mortgage is an ARM (they're capped at 105% ltv). It doesn't matter how much equity your home has lost – as long as it meets the rest of the criteria, HARP 2.0 may be an option.
- most transactions do not require appraisal. Once an application is submitted, we are able to run it through Fannie or Freddies automated underwriting systems (DU or LP) which determines if an appraiser is required. Currently, a majority of HARP 2.0 refinances do not require an appraisal.
- rate-term refinance only. You cannot take cash out or pay off a second mortgage/home equity line of credit.
- second mortgages and helocs will need to agree to be subordinated. This is so that the new first mortgage keeps first lien position. I'm seeing most second mortgage lien holders being very cooperative and agreeing to subordinate.
- existing private mortgage insurance is okay as long as it can be transferred to the new loan. Even if your current mortgage has LPMI (lender paid mortgage insurance) it can probably be transferred to the new mortgage.
- owner occupied, second homes and investment properties qualify including single family detached dwellings, condos and townhomes.
- one 30 day mortgage mortgage late allowed during the last 12 months IF it did not happen during the last 6 months.
What if your scenario doesn't meet the criteria for HARP 2.0? You do have some options. FHA may be a consideration, however it does have both upfront and monthly mortgage insurance (which is increasing on June 11, 2012). Current non-conforming jumbo rates are very low, however they require equity of at least 15% (combined with a second mortgage).
Congress is pushing for HARP 3.0 which would expand the above guidelines to allow more underwater home owners participate in the Home Affordable Refinance Program. And President Obama is promoting his refinance plan which would allow mortgages that do not qualify for HARP (not securitized by Fannie or Freddie) to be refinanced using an FHA insured mortgage.
If your home is located anywhere in Washington and you've been current on your mortgage payments, I'm happy to review your options. I have been originating mortgages at Mortgage Master Service Corporation for the last 12 years. I'm required to provide the following language if I'm trying to solicit your HARP refinance – and if your home is anywhere in Washington state, I am!
Freddie Mac and Fannie Mae have adopted changes to the Home Affordable Refinance program (HARP) and you may be eligible to take advantages of these changes.
If your mortgage is owned or guaranteed by either Freddie Mac or Fannie Mae, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP.
You can determine whether your mortgage is owned by either Freddie Mac or Fannie Mae by checking the following websites: