Home Affordable Refinance Program (HARP)
If you don’t have much equity in your home, you may wonder whether you can qualify to refinance your mortgage. Most refinance programs require a minimum amount of equity before you are able to qualify, leaving you with a mortgage payment that is higher than it needs to be and no way to change it. Fortunately, borrowers with limited equity may still be able to refinance their homes through the Home Affordable Refinance Program, or HARP.
About the HARP Mortgage Program
The HARP Mortgage Program is a unique refinance program designed specifically for borrowers who have little to no equity in their homes. This program can even be used by borrowers whose mortgages are underwater. Under this program, qualifying borrowers can obtain a mortgage with lower interest rates, a better term or other benefits. This program will remain in effect until December 31, 2018, so it is important for eligible borrowers to act now.
A refinance completed under the HARP refinance program is the same as any other refinance. The new loan will be used to pay off your previous loan balance, and you will begin making payments to the HARP lender after the closing is completed. In most cases, your new loan will have different terms than your previous loan, including a different length, different interest rate and more.
HARP Program Requirements
In order to qualify for the HARP affordable refinance program, you must meet several eligibility requirements. The current HARP Program requirements include:
- A decrease in the value of your home since you took out your current mortgage.
- A good payment history during the last 12 months with no late payments in the most recent 6 months and a maximum of one late payment in the period from six to 12 months ago.
- A loan-to-value ratio on your current mortgage that is more than 80 percent.
- A loan guarantee from Freddie Mac or Fannie Mae.
- An original loan closing date of May 31, 2009, or earlier.
The home affordable refinance program can be used to refinance a mortgage secured by a primary residence, second home or investment property.
Benefits of the Home Affordable Refinance Plan
The Home Affordable Refinance Plan offers a number of benefits to borrowers. Some of the most notable benefits of this program include:
- A lower, more affordable monthly payment.
- The ability to reduce your interest rate, which saves you money over the life of the loan.
- A chance to convert your adjustable rate mortgage to a fixed rate mortgage with an interest rate that doesn’t fluctuate over time.
- No appraisal required in most cases, which saves you both time and money.
- A chance to build equity faster with a shorter loan term.
Applying for the HARP Loan Program
The first step in applying for the HARP loan program involves learning about the HARP mortgage requirements. If you think you may meet all of the eligibility requirements for this loan program, you can begin the application process. The application process for the Home Affordable Program is similar to the same application, approval and closing process used to complete your original mortgage.
Before applying for the Home Affordable Program, it is a good idea to gather all of the information and documentation you need to support your application. For example, your lender will want to see your current mortgage statements, statements related to any other monthly debts you pay and proof of your current income. In some cases, other documentation may also be required.
Once you have gathered everything you need, contact your mortgage company to determine whether they have been approved as a lender under the HARP mortgage refinance program. If your lender is not approved to work under this program, you can contact another HARP mortgage refinance program instead to inquire about this type of loan. Your lender will work closely with you throughout the process to make sure that you qualify for the program and that it meets your individual needs.
Costs Associated with the HARP Program
The HARP refinance guidelines don’t define any specific closing costs for refinances completed under this program. Although you may need to pay closing costs under this program, the exact amount of closing costs you will need to pay vary according to the state and the specifics of the program. In some cases, you may be able to roll these closing costs into the balance of your new loan, which means you won’t need to bring any cash to closing. Ask your lender about your specific HARP program requirements with regard to closing costs.
Income and Credit HARP Mortgage Requirements
HARP refinance requirements with regard to income and credit are not as strict as the requirements imposed on other types of refinance loans. There is currently no minimum credit score listed to qualify for the HARP loan program. However, borrowers with higher credit scores may have an easier time qualifying for this loan program than borrowers with incredibly low scores. In addition, the HARP refinance requirements aren’t as strict regarding the borrower’s income. In fact, under the current HARP refinance guidelines, you can opt to have your loan completed with little to no documentation of your income if you have at least 12 months’ worth of mortgage payments in reserves.
HARP Program Rates
HARP program rates vary. In general, they are as low or lower than the standard rate for a conventional refinance. To find out what rate you could qualify for under this program, you need to speak with a lender who has been approved by HARP. With a small amount of information, a HARP lender will be able to give you a rate estimate, so you can decide if this program is right for you.
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