The federal government announced on Monday an update to a program for homeowners that would let borrowers who were underwater – owing more on the mortgage than the house is worth – to refinance their loans at the new historically low interest rates of almost 4%.

The initiative is a tweak of the existing Home Affordable Refinance Program (HARP). It will let some folks who are not eligible for HARP to become eligible, cut fees, and let in those who owe more than 125% of what their house is worth into the program.

To qualify, you must:

* Have a mortgage backed by Fannie Mae or Freddie Mac that was sold to them by May 31, 2009
* The loan-to-value ratio must exceed 80%
* If you’ve already refied under HARP, you can’t refi again
* You can’t have missed any payments in the past 6 months
* You can only have missed 1 payment in the past year

To participate you’ll need to contact a lender that participates in HARP refis. The final changes to the program won’t be announced until November, and then it will be up to each individual lender as to when and if they will take part.

The Home Affordable Refinance Program (HARP): What you need to know [The Washington Post]

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