It has been known that the Home Affordable Refinance Program (HARP) has been a saving grace for a lot of Americans who signed up for it. Since the housing crisis, about 3.4 million Americans have applied for this refinancing program.
And from the recent turn of events, HARP is extended up until December 31, 2018. That’s a 15-month extension from its last deadline which was September 30 of this year. This is all thanks to the Federal Housing Finance Agency (FHFA).
Through the years, the HARP loan program gives homeowners a chance to refinance their property to lower interest rates even if its equity depreciated or decreased. The program kept homeowners from going further below the water. Back in 2009, the program was created to serve that specific purpose: to help refinance homes that were devalued thanks to the housing market crisis in 2008.Confused? Let our lenders guide you.
What does this program specifically do?
Aside from the opportunity to refinance your home even if it has low or decreased value, HARP allows your home to be refinanced up to a 95% loan-to-value (LTV) and offers the opportunity to shift your mortgage to a more secure one like a fixed-rate mortgage. This includes borrowers who have Private Mortgage Insurance (PMI).
HARP has a specific set of eligibility requirements. First, the property should either be your primary residence, second home or investment property. Second, lenders should see that your home value has declined. Your LTV should already be greater than 80%. Finally, you should show a clean and on-time payment history for the past year.
Like any other refinance program, there should be pros and cons that need to be identified. After all, it would help us see if we’re making the right decision in the end.
One of the many advantages of this refinance program is that it has no mortgage insurance. Other refinancing options would usually require this since it protects lenders from defaulting loans. But with HARP, mortgage insurance is not required.
Another upside to this program has to do with the costs involved. Other than having low closing costs, there are no appraisal costs for HARP. This advantage makes the process quicker and simpler for borrowers.
Finally, the value of your home does not factor in for your qualifications. Since the program’s main purpose is to allow homeowners to refinance their home even with a low value, this is something that is not looked into.Looking to refinance? Consult our lenders!
One of the downsides of HARP is that they require borrowers to have a good payment history. That means there should not be more than one late payment 12 months before the application. So if you’ve done quite a few late payments on your mortgage, it would be hard for you to qualify.
If your credit score is not that satisfactory, it might affect the terms that are allowed for you. The general rule here is that the better your score is, the more chances for you to have the terms that you want.
HARP loans are only for loans that are backed up either by Fannie Mae or Freddie Mac. So if your current loan does not fit this requirement, it’s time for you to look for other possible refinance options.Click to See the Latest Mortgage Rates»