Home affordable refinance program - Helps save underwater property
In the present times, the property values have reduced to a large extent in all the states. Moreover, job loss and reduction in wages have made it quite difficult for the homeowners to pay the monthly mortgage payments. In order to help underwater homeowners, the Government had come up with the Home Affordable Refinance Program (HARP) in 2009. Under this program, the borrowers will get a new loan with better terms to pay off existing loan. However, this mortgage refinance option is available only to those homeowners whose loans are owned or guaranteed by Fannie Mae or Freddie Mac.
Eligibility criteria to qualify for HARP:
In order to qualify for HARP, you will have to meet the following criteria:
Loan should be owned of guaranteed by Fannie Mae and Freddie Mac.
The home should be your primary residence.
You should be able to afford the new payment.
No late payments in the last 6 months.
Not more than 1 late payment in the last 12 months.
Maximum LTV is set at 105% for homeowners who want to refinance into an ARM.
Advantages of HARP:
HARP has certain advantages which makes it a viable mortgage refinance option for the underwater homeowners. Some of these advantages are listed below:
Underwriting is lenient.
Closing costs are low.
No appraisal is required at times.
No mortgage insurance is required even if home value is lower than mortgage.
The mortgage interest rates will be low.
You don’t have to prove your income if the loan is owned by Freddie Mac.
If your loan is owned by Fannie Mae, then you can get this option from any lender offering this program.
For a Fannie Mae loan, all closing costs can be included in the mortgage.
New and updated HARP:
In order to allow more homeowners to take advantage of HARP, this mortgage refinance program has been further improved. In an announcement on October 24th, 2011 by President Obama, some guidelines regarding HARP have been updated. These include:
Removal of LTV cap: In the earlier version of the HARP, home mortgage could not exceed 125% of the current market value of the property. In the new version, this cap has been removed so that more people can take advantage of this program.
Extended time limit: The HARP program has been extended until December 31st, 2013 for the benefit of the underwater homeowners. The program had earlier expired on June 10th, 2010.
Appraisal process: In the updated HARP, the appraisal process has been streamlined. If the lenders can determine an automated value, then appraisal won’t be required.
It is expected that Fannie Mae and Freddie Mac will send the required guidelines for this updated HARP to the lenders within November 15th, 2011. This mortgage refinance program will be available to the homeowners from December 1st, 2011 onwards. However, this date may vary from one lender to another.
