What is this government refinance program and what are the conditions?
Many homeowners try to refinance their mortgage but are not succeeding for many reasons. Whether you watch the financial news on CNBC or Bloomberg TV, or listen to the local radionews, I’m sure you’ve heard about the existance of government programs aimed at helping home owners who cannot take advantage of low mortgage rates, because they don’t qualify to refinance their mortgage.
This “Harp loan program” is a fantastic opportunity for property owners with mortgages owned by either Fannie Mae or Freddie Mac.
Maybe you did not get a refinance with a traditional refinance bank, because the value of your home has declined? Or maybe you owe more than the market price of your house? Then the Home Affordable Refinance Program (HARP) may help you to refinance your mortgage.
What is the HARP Program?
The Harp Program is a program especially developped for home owners whose houses have lost value in the last few years and didn’t manage to get a refinance mortgage. Under other circumstances, refinance banks will demand that the equity or value of your property is higher than the mortgage balance before they want to approve any application for a mortgage refinance. But if your house value had gone down during the financial crisis, that is not possible. Thus, the Obama government refinance program was designed for home owners facing this quandary.
When do you Qualify for the HARP Program?
In order to qualify for the HARP program, your mortgage must either be owned or guaranteed by Fannie Mae or Freddie Mac. Additionally, you must meet the following criteria:
- You don’t have an VA, FHA, or USDA loan
- Last year, you were never more than 30 days late for your mortgage payment.
- You are current on your mortgage payments
- Your mortgage is for a larger amount than the value of your home right now.
- The outstanding amount of your mortgage is not greater than 125% of the current value of your house.
- You can prove that you are able to pay for the new payments for your refinance mortgage.
Note that if you do qualify for a refinance under the HARP Program (Harp Refi), you still need to submit a loan application. Further, you have to pay a refinance fee, just as if you were obtaining a refinance through other (commercial) channels. The Harp loan will be underwritten to see if you are qualified to obtain a loan in general. Just because you meet the criteria listed above, there is no guarantee you will be refinanced under the H.A.R.P Program if you do not qualify for a refinance in the first place.
Some of the great features of this Obama refinance program:
Not only you can get lower closing costs but there are more benefits:
- Generally more lenient underwriting
- Sometimes no appraisal is required
- You can get the same low mortgage rates rates that conventional loans qualifying for. This includes adjustments for credit score, type of property, etc.)
- If Freddie Mac owns your home mortgage, you may not be required to prove your income. NOTE: If your loan is owned by Freddie, you will have to do your refinance through your current loan servicer.
- No mortgage insurance needed (even if you owe more money than your property is worth)
- With a Fannie loan, you can include all your closing costs in the mortgage, except for a credit report fee and an appraisal fee (if required)
- a HARP Loan does not require cash upfront.
The HARP loan refinance program is available until December 31, 2013. (Chances are it will be extended again).
This site offers a lot of tips and resources you can use to get a home lone refinance or how to take advantage of cheaper loan rates.
If you are not eligible for this program, there are still other possibilities to avoid foresclosure
Read this article for more information on how to prequalify for a home mortgage.
this video summarizes it very good: