HARP 2 Program Property Questions

by Kenneth in New Jersey and by N. Craig in Washougal, Washington

HARP 2 Program Property Type and Occupancy Status Guidelines: Kenneth asks Kate for Making Home Affordable Refinance occupancy guidelines because he rents out his vacation home condo. N. Craig's streamline refinance question is about HARP 2 property types - single family homes, 2 to 4 units, condominiums, cooperatives, and manufactured housing.


Question 1: Condo HARP 2 Refinance Occupancy Status Guidelines

By Kenneth from New Jersey

Hello Kate. I own a condominium in North Carolina but we do not live there. We use our token 2 weeks out of the year (maybe) to go there. The rental is a managed by the group itself. In another words they rent it out and I get normally a fixed income per month, less if they rent it less often. (The amount is also capped regardless of how much they make.)

I am guessing this is considered an investment property, not a second home? Anyway, I am trying to refinance it under HARP II through my original lender.

First question... Is it an investment property or second home?

Second question... When applying for a HARP refinance, is there a better response to this question to either get a better rate or qualify for the refinance etc?

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Condo HARP 2 Refinance Occupancy Status Guidelines

Hi Kenneth,

I would venture to say with 99% certainty that your mortgage lender will require your condo to be underwritten and priced as an investment property for two reasons:

1) Renters spend significantly more time vacationing in the condo than you.
2) It is an income producing property.

But the good news is that the HARP 2 program refinances primary residences, vacation homes (also called 2nd homes), and investment rental properties of 1 to 4 units.

Occupancy status guidelines are a serious hot spot with lenders. This is due to a higher rate of mortgage foreclosure among rented out homes as opposed to primary residences and vacation homes.

So you will find the least guidelines for owner-occupied homes as well as the best HARP 2 mortgage rates and closing costs. Investment rental properties have stricter guidelines, higher down payment requirements, and pricier interest rates and fees. Vacation homes fall between these two occupancy types.

For more details, go to Shashi's letter at Are HARP 2 Mortgages Only for Owner Occupied Homes.

Best wishes,

Ask Kate

Question 2: Manufactured Home HARP 2 Program Property Type Guidelines

By N. Craig from Washougal, Washington

Kate, Our triple wide manufactured home sits on 6 acres of land designated agriculture. Are we eligible to streamline refinance to lower our interest from 6% and lower our mortgage payment?

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Manufactured Home HARP 2 Program Property Type Guidelines

Hi N. Craig,

I am going to assume your streamline refinancing question is referring to the Making Home Affordable Refinance Program.

The HARP 2 plan includes manufactured homes as one of the acceptable property types - single family homes, 2 to 4 units, condominiums, cooperatives, and manufactured housing.

First determine if your current mortgage is owned by Freddie Mac or Fannie Mae.

Secondly, do you meet the other four HARP 2 program initial eligibility requirements?

Next, contact your lender or another HARP 2 participating lender to begin the loan process. Because of the 6 acres of land, you may get the best results with your current loan servicer. Regardless of which lender handles your refinance, expect a full property appraisal.

If you were asking about the recent FHA streamline refinancing announcement by President Obama, leave a comment on this page to let me know you still have questions.

Best wishes,

Ask Kate

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HARP for Rented Out Apartment
by: Kay from Hoboken, NJ

I am trying to apply for HARP 2 for my apartment. I moved into my parents house and rented out my apartment. But I will move back after two years. Can I still apply for HARP as a primary residence? If I just tell the bank that I still live there, will it be a problem later?

Hi Kay, Kate here. The good news is that since the inception of HARP 2.0, rental properties are eligible for refinancing under the Making Home Affordable plan.

The bad news is that mortgage lenders charge higher closing costs and interest rates for non-owner occupied properties. There are even separate guidelines for rentals. This is because investment properties are more apt to go into foreclosure versus owner-occupied homes due to the lack of emotional attachment.

Even so, I caution you to shoot straight with the occupancy status. Lenders reserve the right to verify occupancy after closing and increase rates and fees if they find a homeowner is not living in the property. Even worse, the loan may be called due-and-payable which means either you better have a ton of cash or be able to refinance on the spot.

Discuss your situation with the lender to see if there is any leeway with the underwriter. But don't fudge. It isn't worth losing your home.

Best wishes for your best mortgage rate, Kate

PS Read more about HARP 2.0 guidelines here.

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