If you currently have little to no equity in your home, HARP may be for you. HARP (the Home Affordable Refinance Program) originated in 2009 and has seen changes to allow more home owners to qualify since its inception. The program was put in place for home owners that couldn't refinance their homes at a lower interest rate due to a lack of equity in the homes. In layman’s terms, home owners owed more on their house than the house was worth and banks would not refinance the homes at the historically low interest rates that were available.
When HARP first became available, four to five million homes were eligible for the HARP program according to the Federal Housing Finance Agency. Since 2009, HARP has been used to refinance over 3.1 million homes according to HUD data. The FHFA estimate that over 800,000 borrowers are still eligible. If you currently have limited or no equity in you home and your interest rate is five percent or more, you should look into HARP.
To qualify for HARP, you must meet all of the following criteria:
Your mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae
Your property must be a primary residence, single family second home, or 1-4 unit rental
Your mortgage was sold to Fannie Mae or Freddie Mac before June 1, 2009
Your mortgage must be current with the last six months of payments on time
You cannot have had more than one late payment in the last year.
You cannot have more than 20 percent equity in your home
You can do a little research to find out if you are eligible or not. First check freddiemac.com/lookup/ and knowyouroptions.com/lookup to find out if your mortgage is guaranteed by Fannie Mae or Freddie Mac. Then get out your closing paperwork and look for the date your mortgage started. Next, go to a credit report site and get a free copy of your credit report. Check for late payments over the last six and twelve months. Ask a realtor for an opinion of value on your home and compare it to your mortgage balance.
You will not qualify for HARP if you find that your mortgage isn't listed on one of the lookup web sites, if you have bad credit, if you have too many late payments, if you have more than 20 percent equity in your home, or if you have used HARP before. If you meet the criteria for HARP and have been previously denied a HARP loan, I urge you to shop around and try again. Changing criteria and different lender standards might just change your result. Hal Inman at the Mortgage Network is a great source to use. He is as knowledgable as anyone I have met in the industry.
You can borrow up to 105 percent of the value of your home with an adjustable rate HARP mortgage, and no maximum percent to value of your home with a fixed rate HARP mortgage.
If you have little or no equity in your home and good credit, HARP may be for you. A lower mortgage payment just might be in your future.
Rick is a Realtor, real estate author, and long time Windham resident. You can reach Rick with all of your real estate questions and needs at columnist@TheWindhamEagle.com.