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HARP - Home Affordable Refinance Program
What is the HARP Program?
In the wake of the housing crisis, millions of homeowners saw their home values plummet. At the same time, interest rates dropped to historic lows. Without enough equity, however, traditional mortgage refinancing wasn't an option. That's one major reason for the implementation of the Home Affordable Refinance Program, and you can learn more about it below.Home Affordable Refinance Program History
The Home Affordable Refinance Program, which is usually referred to simply as HARP, has been around in one form or another since 2009. All along, the goal of the program was to help homeowners who were underwater on their mortgages, which means that they owed more than their homes were worth or had negative equity. In its original form, HARP was extremely restrictive, so few homeowners took advantage of the program.
HARP vs. HARP 2.0
In the fall of 2011, the government unveiled HARP 2.0, which made the program more accessible. As with the original loan program, it is designed to allow underwater homeowners to take advantage of today's low interest rates.
The original HARP program placed limits on how much a homeowner's loan-to-value ratio could be, but HARP 2.0 did away with the LTV restriction thereby allowing more homeowners the ability to refinance.
With a HARP mortgage, a homeowner with no home equity is able to refinance current mortgage and receive a new first mortgage. It usually comes with a lower interest rate, more stable terms and provides lower monthly mortgage payments. One drawback of the current HARP program is that it's limited to people whose mortgages are backed up by Fannie Mae and Freddie Mac. HARP 3.0, which has been proposed by the Obama administration, would expand the program so that many more homeowners could take advantage of it.Current HARP Eligibility Requirements
It's relatively easy to determine if you are qualified for the current HARP program. A few key points about HARP eligibility include:
If you are upside down on your home mortgage and meet the other HARP eligibility requirements, the time to act is now. Although HARP 3.0 may be offered in the future, there are no guarantees. The current program expires on December 31, 2013. Without acting before then, you may miss your chance to refinance your mortgage under current HARP guidelines.Benefits of Refinancing Under HARP
As long as you meet the loan requirements of HARP, refinancing your mortgage under this government program could bring many benefits to the table. A few of the top examples include:
If you believe you qualify for a HARP loan, it's easy to get the process rolling. Follow these steps to get started:
Currently, a new version of the HARP loan has not been approved. The loan requirements of a new refinance program are also unknown, but President Obama would like to make the refinance program less restrictive to allow more homeowners to participate. If the new version of the program is not approved, the Home Affordable Refinance Program could expire entirely at the end of 2013.What You Need to Provide to Refinance Using a HARP Home Loan
Keep in mind that applying for a HARP loan is no different than applying for any other mortgage. You will need to gather your documents, submit a loan application, and you will have to go through underwriting. Following is a list of the basic documents needed for the refinance:
If your loan is approved, you will also incur mortgage closing costs which maybe financed into your home loan. However, the amount that you could save through a HARP mortgage should far out weight these mortgage expenses.How to Take Advantage of the Home Affordable Refinance Program
Knowing how to refinance a mortgage with HARP is the first step in obtaining a more affordable home loan. By working with a qualified mortgage lender, you should be able to get through the mortgage refinance process smoothly. The end result should be more favorable loan terms and a lower monthly mortgage payment.
Thousands of homeowners have already take advantage of HARP. If you'd like to join them, start exploring your refinancing options today. Before you know it, you could start enjoying lower monthly mortgage payments.
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