Are you under water or upside down on your mortgage and want to keep your home? If your home is in a state of negative or near negative equity (you owe more than it’s worth), you might consider applying for the Home Affordable Refinance Program, also known as “HARP.”
What is HARP?
HARP was introduced in 2009 to offer homeowners who had little or no equity in their property, but who were still making their mortgage payments, a viable refinance option when they failed to qualify for a traditional refinance based on their declining property value. The goal of the program is to encourage underwater homeowners to refinance in order to secure a more stable and affordable mortgage, thereby, allowing homeowners to maintain long-term ownership of their property, which might not have been possible had they not been given the opportunity to refinance.
HARP is an option only for borrowers who have a mortgage guaranteed or owned by Fannie Mae or Freddie Mac, which was purchased by a government backed entity on or before May 31, 2009. Homeowners who are delinquent or who have made a payment more than 30 days late in the past year will likely not qualify. However, if you are unsure of your payment history, you should contact your lender to find out whether you could qualify to refinance under HARP.
In addition, homeowners can take advantage of the HARP program to refinance second homes and investment properties. Although there is no requirement that the home be owner occupied to secure a HARP refinance, just like a traditional refinance, owner occupied properties will be subject to receive more favorable refinance rates. If you have a mortgage subject to the above mentioned terms, you can apply to refinance your mortgage through HARP until December 31, 2013.
Originally, HARP focused on offering a refinance option based on determining the loan-to-market value ratio, where the ratio was greater than 80% and was equal to or less than 105%. The loan-to-value ratios have been increased twice since HARP’s introduction in 2009, and currently there is no limit on the loan-to-value ratio for applicants. This is good news; it means that there is no maximum loan-to-value restriction in place and upside down homeowners can apply to refinance, regardless of the equity (or lack thereof) in their home.
How can I apply?
First find out whether your mortgage is owned by Fannie Mae or by Freddie Mac by using these lookup tools. Then do your homework to ensure that your lender can offer you the best refinance rate. Once you are satisfied that you have found the best rate, contact the lender to get the application process started. But please remember, just because you apply does not guarantee that you will be accepted or receive a refinance offer. And if you receive an offer, refinance costs and fees will apply!
If you have more questions, you can visit www.makinghomeaffordable.gov, or call 888-995-4673.