The Home Affordable Refinance Program (HARP) was recently expanded in order to accommodate more homeowners than ever before. HARP loans remain one of the best options for homeowners who are underwater or otherwise dealing with a stressed property. Here are a few of the options that you can take advantage of if you are facing some of the more serious problems of owning a real property.
What Is HARP?
HARP is a fairly unique program in that borrowers who use it can have little or no equity in their homes, yet they can still utilize loans with relatively low interest rates and benefits that are usually reserved for high credit borrowers. One of the most substantial changes to the HARP initiative made recently is the removal of the underwater limit. There is now no cap on the negative value that a homeowner can be underwater, meaning that homeowners who were not eligible in previous generations will now qualify for benefits.
How Can I Qualify for HARP?
First, you must have a consistent history of payments for the past year. You cannot have any late payments within the past six months, and the six months previous may only have one late payment that is resolved within a 30 day period.
The home that you are trying to place under the HARP initiative does not need to be a primary residence as with most of the other government refinance programs; you can actually use HARP for second homes and even with commercial investment properties.
In most cases, your home value will have decreased substantially, to the point where you owe more on the house than the house is actually worth.
Because of the change in value of your home, the equity in your home will be relatively limited as well. Your first mortgage will exceed the home value, and your loan to value (LTV) ratio is above 80 percent.
Your loan must be guaranteed or completely owned by Freddie Mac or Fannie Mae, and your loan must have been closed on or before the date May 13, 2009. This is a matter of the public record, and you can find it using this Fannie Mae ancillary website directly.
What Should I Use the HARP Initiative For?
You can use HARP in order to lower your monthly payment, initiate a fixed rate mortgage, reduce your interest rate, build up your equity, and you can do all of this without having to pay for a home appraisal. You should use the program for refinancing even if you have cash reserves to continue paying on an underwater mortgage. You do not have to be completely devoid of cash in order to use the HARPÂ initiative; as a matter of fact, that cash may actually serve you well in shoring up the closing costs on the process.
What Are the Steps I Take to Use HARP?
You should first organize your financial information. Before you call your lending company, make sure that you have all of your mortgage loan statements on all mortgages, information about your income, and any other monthly expenses that you have in your household.
After you gather up all of this paperwork, call your primary lender to see if they have a HARP certification. You may also contact a direct HARP lender. If your loan is under the auspices of Fannie Mae, you actually have a special page on this HARP ancillary website.
When you find your HARP lender, that lender will take you through a process that is similar to your original home buying process. It will involve a similar application and closing negotiation. As such, you should prepare for origination and closing costs depending on the state that you are seeking the loan in. You may be able to roll these costs over into your loan in order to keep from paying them out of pocket, but do not rely on this feature. However, you will not have to spend money on many of the costs of your original mortgage process such as appraisals and inspections.
Another advantage of HARP is that you do not have to pay anything down in order to refinance your home. The income requirements have also been loosened, so you may still be able to qualify for and use the HARP initiative if you have lost a job or taken a hit to your income.
What Is My Next Move?
If you have been looking for a life preserver in a world that seems to want you to drown, the HARP initiative may be just the plan that you are looking for. Even if you have had trouble with the program in the past, today’s HARP initiative is much different from its predecessors. Make sure that you call your HARP representative today so that you can see exactly how much relief you can get from this groundbreaking program. Have all of your financial documents ready, and go in with an attitude of refinancing your life, not just your real estate.
2 Point Highlight
The home that you are trying to place under the HARP initiative does not need to be a primary residence as with most of the other government refinance programs; you can actually use HARP for second homes and even with commercial investment properties.
You can use HARP in order to lower your monthly payment, initiate a fixed rate mortgage, reduce your interest rate, build up your equity, and you can do all of this without having to pay for a home appraisal.
