HARP LTV Ceiling Raised To 125%

deral Housing Finance Agency (FHFA) has authorized Fannie Mae and Freddie Mac to expand the Home Affordable Refinance Program (HARP) to homeowners who are current on their mortgage payments from the present loan-to-value ratio (LTV) ceiling of 105% to 125%. ‘This decision is part of our ongoing efforts to maximize the effectiveness of the Making Home Affordable program and adapt to an ever-changing housing market,’ says Treasury Secretary Tim Geithner. With these expanded refinance opportunities, qualified borrowers whose mortgages are currently owned or guaranteed by Fannie Mae and Freddie Mac will be allowed to refinance those loans according to the terms of HARP established earlier this year. "The higher LTV refinancings will allow more homeowners to strengthen their finances by taking advantage of lower mortgage rates," says FHFA Director James Lockhart. "The enterprises are also incenting these borrowers to combine a lower mortgage rate with a faster amortization schedule, which will enable them to get "above water' on their mortgages more quickly." The program provides borrowers with an incentive to reduce the term of their loan from 30 years to a shorter-term, fixed-rate mortgage and therefore pay down the principal more quickly and reduce lifetime interest payments. SOURC

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