The HARP, or Home Affordable Refinance Program, is offered through the Department of the Treasury and Housing and Urban Development. It is designed to provide assistance to homeowners who want to take advantage of lower interest rates by refinancing their current mortgages, but don?t qualify for traditional refinance loans because they owe more on their mortgages than the current value of their homes.
Many homeowners who have diligently made their mortgage payments each and every month still find themselves in a negative equity position, where their mortgage balance is higher than the amount their home is worth, due to falling real estate prices. Even if they would be an excellent candidate for a mortgage refinance based on their credit scores, credit history, income, assets, and other criteria, they have been unable to get approved for a mortgage because of their negative equity. It is simply too risky for most banks and mortgage lenders to lend in this scenario. This is where the HARP program comes in.
HARP, with backing from the federal government, can help those who are current on their mortgage payments by allowing them to refinance their home loan into a new loan that is more affordable. Homeowners with adjustable rate mortgages may also choose to move into a fixed rate loan for additional stability. To be eligible for the HARP program, homeowners must meet the following requirements:
- The borrower must be currently up to date on their payments and have a perfect payment history within the past 12 months.
- The current LTV or loan-to-value, must be more than 80%, meaning you have a maximum of 20% of equity in your property.
- Freddie Mac or Fannie Mae must own or guarantee the mortgage and it must have been sold to either of them before May 31, 2009.
- The mortgage cannot have been refinanced under the HARP program previously. Only those that were a Fannie Mae loan and refinanced under HARP between March and May 2009 will be eligible.
Be aware that not all mortgage providers participate in HARP. You can check at the following links to see if your loan is owned by either Fannie Mae or Freddie Mac:
www.fanniemae.com/loanlookup or www.freddiemac.com/mymortgage
If you are eligible to refinance under the HARP program it is a great time to look into doing so. Mortgage rates remain near historic lows, and many homeowners who have refinanced in recent months have been able to significantly lower their monthly payments, and reduce the overall interest they will pay as they pay off their home loans.
Talk to a mortgage representative about a HARP refinance to determine whether you are eligible under the current program, and to receive a quote for today?s mortgage rates. He or she can also help you calculate what you are likely to save each month on your mortgage payment, and help you evaluate the different home loan programs you may qualify for.
About the author: Lisa Andree writes for ForTheBestRate.com, a website where consumers can research mortgage rates and mortgage lenders, covering the home financing and real estate markets.
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