OK, everyone is talking about HARP 2.0 and so let's define it. First of all, since it is 2.0 that means that the program was already around and we are all talking about the new changes so let's show you what it looks like now and then discuss changes that are sort of in effect now and really in effect in March 2012.

Currently the program allows you to refinance a mortgage if you owe more than the home is currently worth and it allows you up to 125% Loan To Value (LTV). There are different rules up to 95%, up to 105% and up to the 125% cap. The loan has to have been funded prior to June 1st, 2009 and must be currently owned by Freddie Mac or Fannie Mae and you still need to qualify to make the payments and have decent credit.

The rules are written but lenders interpretations are not quite in stone yet. Fannie and Freddie will not have their updates to the automated underwriting systems updated until March 2012 and most lenders are waiting for that to start funding these loans.

What is changing is the LTV limit is being tossed out and you can finance no matter how far under water you are. They are also loosening credit and qualifying guidelines and will be putting more emphasis on payment history and less on debt ratios. This is the part that is most unclear until we get the automated underwriting updates.

So...... what should you do? What you should do is contact your favorite lender (I can help in CA) and have them get you started in their system so when the underwriting guidelines are updated they can just plug you in when things get started in March.