HARP – the Home Affordable Refinance Program – is undergoing some much needed revisions to its eligibility criteria. Previously the program allowed some homeowners to refinance their existing mortgages up to 125% of the home’s value.

For example, let’s say you owe $200,000 on your mortgage. Due to the dramatic drop in home values across the Valley (generally), your home is now worth $140,000 (sadly, this is not unreasonable within the Phoenix market). Under the old HARP guidelines, the most you could refinance for would have been 125% of that $140K home value — that would be $175,000 (140K * 1.25 = 175K).

But you owe $200K, so a refi for $175K does you absolutely no good.

Enter the new guidelines. The 125% loan-to-value (LTV) limit has been lifted. Gone. Over. There is no LTV restriction under the new HARP guidelines.

This bodes well for Arizona homeowners.

I am not a lender. I’m a real estate broker.

I can answer some questions on the new HARP / Making Home Affordable program, but the person you really need to be talking to is a lender / loan officer.

Dan Green, a noted and highly regarded loan officer, has written the definitive article on the new HARP / Making Home Affordable eligibility requirements. Read that post. It is written in simple to understand terms, not the seemingly foreign language many lenders and real estate people toss about. It’s important to understand the program, and Dan explains it very well.

Keep in mind, not everyone will be eligible for a HARP refinance. But under the new guidelines, many more just may be able to refi that seriously underwater home…