HARP stands for Home Affordable Refinance Program, and it is an initiative taken from the side of Federal Housing Financial Agency, to financially support the underwater homeowners. The most relevant organizations associated with HARP mortgage refinance are; the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). The homeowner’s credit obligations on their regular monthly payments are backed up by this program.
If you have a hard time obtaining money to refinance your home, because its value has dropped, you may qualify for a HARP Loan. Its purpose is to help homeowners in need before they face foreclosure or fall behind on their mortgage payments.
There are some criteria imposed by the US Federal Housing Financial Agency you need to fulfill to qualify for the HARP mortgage program. Before visiting a reputable lender, make sure you can apply for this type of loan. The first condition is to check if the refinance mortgage is owned or guaranteed by Fannie Mae or Freddie Mac. The second criterium is to ensure your loan started before June 1st, 2009. There shouldn’t be any previous applications made to obtain this type of mortgage refinance. The third condition is that the loan-to-value ratio of the property has to be greater than 80 %, according to the set parameters. Calculate the LTV ratio by dividing the loan amount by the estimated value of your home. The higher the LTV, the greater the risk for a lending institution. Also, you must be up to date with your existing mortgage obligation and have a good payment history for the last 12 consecutive months, as this shows your credit worthiness, and the reliability needed to apply for a HARP Streamline Refinance. These loans are not meant for people already facing foreclosure, or with a bad payment history.
There is no specified limit on the loan amount, which gives the homeowner a chance to decide on the refinance value and structure. The interest rates vary, according to the sum of money you want to borrow, and the term of the loan is usually from 10 to 30 years. It is a wise to choose an optimum credit amount, to avoid a long interest-paying period, and long-run financial burdens.
The first thing you need to do is consult with a mortgage lender that participates in the HARP program. You can also visit several companies and compare rates and loan terms if you want to find the best deal. If your original lender does not participate in the program, choose someone who does, as you do not want to stay with the same company you used for the first mortgage if this is the case.
Before applying for a HARP Loan, you should gather all the necessary documents. For example, you need to be familiar with and present information about any other mortgages on your home, the monthly loan statement, your last two year’s tax returns, and your two most recent bank reports. You also need a copy of your unemployment insurance letter, if you are receiving it, and documentation of all income sources including child support, alimony, and social security. They will also ask you about your assets and savings.
A HARP Loan can help you keep your home and your head above water. Don’t wait until falling behind on your mortgage payment to apply for this credit. All you need to do is contact a legitimate HARP Loan lender, and soon, you will get the help you most certainly need. If you qualify, you will be able to stay in your home, and enjoy lower monthly rates for several years which should give you time to get back on your feet.