Another great article I found to share from Bank rate!

HARP 2.0 refinance: What you need to know

By Polyana da Costa • Bankrate.com

• HARP 2.0 allows refis on mortgages, no matter how far underwater they are.
• Among the requirements: You must have a good recent payment history.
• Having a second mortgage shouldn’t be as much of an obstacle.

The wait is over for homeowners who want to refinance but owe more on their mortgages than their homes are worth. Starting next week, borrowers should find a wide range of lenders offering refinances through HARP 2.0, a program that allows borrowers to refinance regardless of how deeply underwater they are.

In places that were hit hardest by the housing downturn, homeowners have been waiting to refinance under HARP 2.0 for months, as it is their only chance to refinance at a lower rate.

“It is going to be a very big deal for places like Florida,” says Rob Nunziata, president of FBC Mortgage, based in Orlando, Fla. “It will help a lot of responsible borrowers.”

HARP 2.0, a revamped version of the Home Affordable Refinance Program, was announced five months ago. Until now, only a limited number of borrowers had access to it. Although a few national lenders started to offer HARP 2.0 refinances to their own customers earlier this year, most lenders had to wait for Fannie Mae and Freddie Mac to update their automated underwriting systems with the program’s new rules. All updates should be completed by March 17.
Read more: HARP 2.0 Refinance: What You Need To Know | Bankrate.com http://www.bankrate.com/finance/refinance/harp-2-refinance.aspx#ixzz1pDPS0ctk

As of Monday, borrowers should have plenty of options when shopping for a HARP 2.0 refinance.

“If you are turned down for HARP 2.0, it makes sense to talk to a different lender,” says Dan Green, a loan officer at Waterstone Mortgage in Cincinnati.

Who’s eligible?

To qualify for a HARP 2.0 refinance, you must meet these requirements.

• Your mortgage must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.
• You must be current on the mortgage and have no late payments in the last six months. A late payment is defined as one that’s more than 30 days overdue.
• You must not have more than one late payment in the past 12 months.
• This must be your first refinance through HARP. If you have refinanced under an earlier version of HARP, then you do not qualify.

HARP 2.0 might succeed

Borrowers have grown frustrated as they hear announcements of numerous mortgage relief programs that do little to help them. But HARP 2.0 has the potential to succeed. Many of the obstacles borrowers faced in earlier versions of HARP were removed. The program is expected to help thousands of underwater borrowers lower their monthly house payments, mortgage experts say.

The previous version of the program did not allow refinances for borrowers who owed more than 125 percent of what their homes were worth. That requirement stood as a major obstacle to thousands of borrowers whose homes plunged in value. HARP 2.0 removes that cap.

HARP 2.0 releases the lender’s liability on the original loan. In short, that’s a key incentive to get lenders to embrace the program.

With the previous version of HARP, many homeowners complained that lenders wouldn’t refinance more than 105 percent of a home’s value, even though the program’s cap was 125 percent. Some feared lenders would adopt a similar policy for HARP 2.0. But three of the largest lenders — Bank of America, Chase and Wells Fargo — say they have removed the cap and are willing to refinance according to the HARP 2.0 new guidelines.

Overlays

Lenders may add their own internal requirements, called “overlays,” to the HARP 2.0 guidelines, Nunziata says. Although there is no minimum credit score to qualify for HARP 2.0, some lenders will require a minimum of 620, he says. Such a requirement is an overlay.

Lenders are required to verify income, employment and credit history under HARP 2.0. But it appears that many lenders will offer HARP 2.0 refis with limited overlays, especially on primary homes, Nunziata says.

“We’ll have no overlays,” says Ted Iturriria, vice president of loan production at AimLoan.com in San Diego.

Increased demand means potential delays

Bank of America, Wells and Chase say they have had a large volume of applications from borrowers for the HARP 2.0 program since they made it available to their existing customers.

Having been inundated with inquiries from borrowers, smaller lenders and brokers across the country have gathered applications and documents so they can process the refinances as soon as the system becomes available to them this weekend.

As lenders become overwhelmed with the volume of applications, borrowers should be prepared for delays, Green says. “Talk to your loan officer and get their feel for what’s an appropriate length of time” for closing, he says. Lock your rate accordingly.

Second mortgages not as big of an obstacle

If you have a second mortgage, you’re more likely to encounter delays. That’s because the second mortgage lender has to sign off on the refinance, agreeing to subordinate the loan to the lender who refinances the first mortgage.

But the good news is, lenders will be more willing to sign off on HARP 2.0 refinances than they were with the previous version of HARP, industry experts say.

“If you have to subordinate, you’ll have some delays, maybe 30 to 45 days, but I don’t think it will hold anybody back,” says Brett Sinnott, director of secondary marketing at CMG Mortgage in San Ramon, Calif.

Tax Time Tip: Deducting Private Mortgage Insurance: I found this well-written by Kay Bell for Bankrate.com’s annual Tax Guide

Homeowners are well aware of the many home-related tax breaks they can claim each filing season.

But there also are a lot of added costs that come with purchasing a home. For buyers unable to make a down payment of at least 20 percent of their home’s purchase price, one of those costs is private mortgage insurance, or PMI. A PMI policy is coverage that you, the homebuyer, pay for, but it protects your lender in case you default on your loan.

Now, however, some PMI payers can at least use those insurance payments as a tax deduction when they file their returns.

Originated in 2007, extended through 2011

This tax deduction was created as part of the Tax Relief and Health Care Act of 2006 and originally applied to private mortgage insurance policies issued in 2007.

But because the housing market was slow to recover, lawmakers have extended this tax break. It now is in effect for premiums paid through 2011.

The private mortgage insurance deduction can be taken for policies issued by private insurers as well as insurance provided by the Federal Housing Administration, the Department of Veterans Affairs and the Department of Agriculture’s Rural Housing Service.

Counted as interest

Many homeowners itemize deductions because their mortgage interest and property tax payments exceed the standard deduction amount they could claim.

It’s in the “Interest You Paid” section of your Schedule A that you’ll find the private mortgage insurance deduction. It is claimed on line 13.

What amount of PMI do you claim? You should find the amount in box 4 of the Form 1098 (or the substitute year-end loan information statement) that your lender sent you.

Time, occupancy restrictions

While it’s easy to claim the PMI deduction, make sure you meet the requirements.

First, note when you paid the mortgage insurance. The deduction is allowed only if you took out the mortgage on which you pay PMI on or after Jan. 1, 2007. No PMI premiums are deductible if they were made in connection with a home loan that was made before that date.

Any associated PMI premiums on new mortgages issued through 2011 will qualify for the deduction.

If you refinanced your home since Jan. 1, 2007, you also qualify for the PMI deduction on that loan. Be careful as to how you structure your refi. The mortgage insurance deduction applies to refinances up to the original loan amount, but not to any extra cash you might get with the new home loan.

You also might be able to deduct private mortgage insurance payments on a second home loan. As with your primary residence, the loan on the second home must have been issued in 2007 or later to be deductible.

The additional property also must be for your personal use as a second or vacation home. If you rent it out, then you could end up paying the PMI without any help from the Internal Revenue Service, unless you claim tax breaks on the home as rental property.

Income phaseouts

Finally, while there is no statutory limit on the amount of PMI premiums you can deduct, the amount might be reduced based on your income.

The deduction begins being phased out when the homeowner’s adjusted gross income, or AGI, is more than $100,000. This income limit applies to single, head of household or married filing jointly taxpayers. The phaseout begins at $50,000 AGI for married persons filing separate returns.

The PMI deduction is reduced by 10 percent for each $1,000 a filer’s income is over the AGI limit. The deduction disappears completely for most homeowners whose AGI is $109,000 or $54,500 for married filing separately taxpayers.

The Schedule A instructions include a work sheet, as does most tax preparation software, that homeowners can use to determine their reduced private mortgage insurance deduction amount.

Read more: Print: Deducting private mortgage insurance http://www.bankrate.com/system/util/print.aspx?p=/finance/taxes/deducting-private-mortgage-insurance.aspx&s=br3&c=taxes&t=guide&e=1&v=1#ixzz1pDO2NVWn