HARP Program For Homeowners With Underwater Mortgages
What Is The HARP Program?
Millions of homeowners fell victims to the real estate and credit meltdown of 2008 and have seen their hard earned equity in their homes evaporate where many were left in homes where the mortgage balance was higher than the value of their homes. Million of homeowners bailed on their homes while others kept their homes even though the value of their homes were less than what they owed in their homes. To reward these homeowners with upside mortgages, the government implemented the Home Affordable Refinance Program, also known as HARP Program. The mortgage lending guidelines for the HARP program is relaxed.
HARP Program Versus Loan Modification
The HARP Program should not be confused with a loan modification. Loan modifications are for those homeowners who have financial issues due to extenuating circumstances such as unemployment or loss of a business and lenders often forgive a percentage of the principal balance of the mortgage loan and can offer mortgage rates as low as 2% or less. With the Home Affordable Refinance Program, there is no reduction of the principal balance. The mortgage borrower needs to fully pay off the existing mortgage loan balance and whatever the current mortgage rates are will be the mortgage rate the mortgage loan borrower will get offered.
What Are The Qualifying Requirements For HARP?
To qualify for the HARP Program, your current mortgage has to be owned by either Fannie Mae or Freddie Mac and your mortgage loan had to have been originated and closed no later than June 1, 2009. If your mortgage loan is not owned by Fannie Mae or Freddie Mac, you will not qualify for the Home Affordable Refinance Program. You must be current on your mortgage payments and you can only have one 30 day late payment in the last 12 months. More than one 30 day late payment will disqualify you for the Home Affordable Refinance Program. You cannot have had a prior Home Affordable Refinance Program mortgage loan. Only a one time HARP Program Loan is allowed. There is no limit on how much your mortgage loan is upside down. You can owe $300,000 on your mortgage balance and your home can be worth $100,000 and still qualify for a Home Affordable Refinance Program mortgage loan. All HARP Program loans are for rate and term refinances only and no cash out is allowed. Closing costs in refinancing the HARP loan can be added on to the balance of the new refinance mortgage loan. A co-borrower can be removed if the main borrower can provide that he or she has been making the payments. Requests like this is often common in cases where the homeowners were a couple but ended up getting a divorce and the non-occupant spouse wanted nothing to do with the home nor the payments of the new mortgage loan. On the flip side, you can add another qualified borrower.
Homeowners with a prior bankruptcy but exempted the home from the bankruptcy can qualify for the Home Affordable Refinance Program as long as the bankruptcy discharge date has been at least one full year and they have been paying their mortgage payments timely from the discharge bankruptcy date. Mortgage insurance is not required with HARP loans if you did not have mortgage insurance on your current mortgage loan.
What If I Have A Second Mortgage? Can I Qualify For HARP Program?
The Home Affordable Refinance Program is only for refinancing first mortgages. Second mortgages cannot be consolidated with a new HARP Program. However, you can have the second mortgage or home equity loan subordinated by the second mortgage lender. You would need permission from the second mortgage lender and most of the time, second mortgage lenders do assist and will agree to subordinate the second position with the new HARP Program.
Mortgage Rates Are At All Time Low
There are still thousands of homeowners who have not refinanced their high mortgage rate loans. Some homeowners still have interest rates in the 6% or higher range and should consider refinancing their homes whether is via the Home Affordable Refinance Program or just a regular standard refinance mortgage.
Real estate values tanked in 2008 through 2010 and have been recovering since 2011. Many areas in Florida, Illinois, and California have seen double digit market value increases year after year since 2011. Many homeowners with underwater mortgages do not realize that their homes are no longer underwater and they can now sell their property or refinance it at a much lower rate. There are many homeowners who contact me daily who are surprised to see that they no longer have live in their homes forever because their mortgages are no longer underwater and can now put their homes in the market and purchase another home. Consult with a realtor to see what your home is worth. If you are still underwater on your mortgage, contact me and lets see if it makes sense to explore refinancing via the Home Affordable Refinance Program or see if there are other refinance mortgage programs that will better suit you.