HARP is an acronym which stands for the Home Affordable Refinance Program. It is a government program offered by the Department of the Treasury and Housing and Urban Development. It was established in March 2009 in an effort to provide assistance to approximately 5 million homeowners who were holding underwater mortgages. HARP was especially designed in an effort to assist those U.S. homeowners who owe more on their mortgages than their homes are worth. Of those underwater mortgage holders, more than 3 million have now been able to refinance their mortgages and obtain more affordable rates. Being able to obtain better rates through HARP has prevented millions from losing their homes.
As the program has gained popularity, several revisions have been made in an effort to streamline its guidelines and eligibility requirements. HARP 2.0 was put into effect in 2012 in order to make the program easier to use. Since HARP 2.0 is set to expire at the end of 2015, proposed changes are currently under discussion in Congress for the next edition of the program, known as HARP 3.0, also referred to as #MyRefi. If the new plan is approved by Congress, these points would be included as part of the new guidelines:
- Homeowners who do not hold mortgages issued by either Freddie Mac or Fannie Mae would be allowed to refinance through HARP.
- The previous requirement set forth in 2009 that required loans eligible for refinancing through HARP to have been sold to either Fannie or Freddie by May 31st, 2009 would be dropped.
- Those borrowers who have already used HARP to refinance a property would be allowed to use it again for the same property.
Until any changes are officially made, here is a look at the current HARP 2.0 requirements:
- 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. Applicants can not have refinanced with HARP before.
- If the above is true, then you may be eligible for HARP. Mortgages that originated as an FHA, USDA, VA or a jumbo mortgage, are not eligible.
- To be obtain refinancing through HARP, you must be current on your monthly mortgage payments.
- If the borrower’s original lender does not handle HARP refinancing, they may find one that does.
- If you meet the eligibility requirements, and are not underwater, it is still possible to refinance your home through HARP.
- If your original lender does not offer HARP refinancing, you may use one that does.
- Borrowers who have been unable to apply to the HARP program because of low credit scores, LTV, PMI, or other issues, should get a second or even third opinion. Some lenders are using different variations of the program, and the current guidelines may allow those who have been previously turned down to participate.
- Since HARP’s interest rates can vary, it is best to shop around for the lowest rates. It is also advised to compare closing costs, because they are not all the same.
- Refinancing through HARP does not stop the foreclosure process. It instead gives homeowners who are current on their mortgages, and who have lost home equity, the chance to refinance at a lower rate.
- Borrowers who have been denied access to the HARP program based on their credit score, LTV, PMI, or other issues, should get a second or even third opinion. Some lenders are using different variations of the program, such as the one that was first introduced.
- Since there are no loan-to-value restrictions, HARP may be a solution, no matter how far the mortgage has fallen underwater. The new refinanced mortgage must be a fixed rate loan with a term of 30 years or less. For those planning to use the HARP program and refinance to an adjustable rate mortgage, the loan-to-value has a 105 percent cap.
- Homeowners who paid 20 percent down and were not required to pay private mortgage insurance will not have to pay it through a HARP refinance.
- Those currently paying for PMI can refinance via HARP 2.0 and should not see an increase in their rates.
- The largest mortgage that is possible to obtain through a HARP refi is kept in check by each area’s conforming loan limits. Depending on where you live, they range between $417,000 and $625,500.
- It is not possible to do a cash-out refinance with HARP.
- Condos, vacation homes, and investment properties are eligible for HARP. It is also possible to refinance the property and rent it out-as long as all of the program guidelines are met.
- HARP may not be used to consolidate several mortgages-it is for properties with first liens only.
- Homeowners who are unemployed and unable to earn an income are eligible for HARP.
- If a HARP-eligible homeowner is underwater, their income, no matter how high, will not prevent them from being able to refinance.
- Couples who have gone through a divorce may be removed from the original mortgage agreement through the refinance action. They must also be taken off the deed.
Learn more about the program here: http://www.harp.gov/ – You can also call eLEND for more information on refinancing your mortgagte through HARP – (800) 634-8616.
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