The Home Affordable Refinance Program (HARP) was created in 2009 and is a federal program of the US Government. Its goal is to help homeowners whose home value fell close to or below their mortgage balance following the collapse of the housing market in 2008. Because most lenders typically require a loan to value ratio of 80% or less to qualify for refinancing, millions of homeowners were left without the opportunity to take advantage of refinancing options. Those homeowners who qualify for HARP are provided the opportunity to refinance their existing mortgages to obtain a more stable and more affordable mortgage.
The government set criteria for HARP eligibility. Since its inception, the criteria has changed, however there is currently five main requirements to be included as eligible.
There are no restrictions on the occupancy type for HARP qualification. Whether the property is a primary residence, a second home, or a rental property, if the above qualifications have been met the property is eligible for the program. However, the interest rates for rental properties will be higher than for primary resident properties through Freddie Mac and Fannie Mae. The HARP program is currently scheduled to end on December 31, 2015.
The first step in obtaining a HARP refinance is to determine whether or not your loan is a Freddie Mac or Fannie Mae owned loan. There is no minimum credit score to qualify, and in many cases your closing costs can be wrapped up with the new mortgage. This helps to eliminate the up-front costs that traditional refinancing requires.
HARP is designed to help individuals who have remained current in their mortgage payments a chance to secure a mortgage with better terms. Mortgage rates are at historically low levels and those with interest rates that are much higher than the current rates can experience an immediate reduction in the amount of their monthly payments. Even in cases that will not likely see an immediate reduction such as a homeowner that is paying only interest, has an adjustable rate mortgage (ARM) with a low rate now that will increase, or who will have a balloon payment can save thousands over the total life of their loan.
Also, it is an excellent option for those who struggle with their high mortgage payments. If your payments are not sustainable and a foreclosure seems eminent, as long as you are still current on your mortgage, you may qualify for refinancing through HARP that lowers your payments to a manageable level. Refinancing through HARP can also be a lifesaver for people with adjustable rate mortgages. HARP would change those ARM’s into fixed mortgages providing more security and stability.
As with any financial decision, it is important to get all the facts and do the math to ensure that you are making the right choice. When applying for a mortgage, the lender will provide you with a good faith estimate and a truth in lending statement. Review these carefully and compare them to your current mortgage to determine if refinancing through HARP will be an improvement, or if it is not the best option for your unique situation.
Navigating mortgage and loan rates is complicated! Why not let our team do the hard work for you? Equity Source Mortgage is a trusted mortgage broker in Minnesota. We believe that people deserve a home to call their own. At Equity Source Mortgage, our number one goal is to match you with the best loan for you. Contact us or call us at 763-657-2000 to begin exploring your home ownership journey – YOUR Dream Is Calling!