Home Affordable Refinance Program
What Is The HARP Mortgage Program?
Americans have been forced to struggle in recent years, often having to make sacrifices or hard decisions in order to keep their homes. During the economic downturn of the past several years, mortgage costs began to make it hard for average Americans to meet their bills. Home values have dropped while mortgage interest rates rose.
But the HARP Mortgage Program could help you if you're facing a similar problem. HARP stands for the Home Affordable Refinance Program and is often referred to as HARP 2.0, The Obama Refinance Program, or the DU Refi Plus Program. No matter what you call it, this program can offer relief if you're struggling with mortgage costs that just aren't fair.
Essentially, the HARP Mortgage Program is a type of government loan program that is designed to help those who need to refinance their home and make it a bit more affordable. In traditional refinance situations, getting approval for a loan is difficult when home values decline. The HARP program helps avoid this and could manage to secure a refinance loan for anyone who qualifies.
There are a few key qualifications that you'll have to meet in order to be eligible for HARP . If you meet the following requirements, you may be able to refinance your home through this program.
- Date Of Sale - Your loan will have to have been sold to Freddie Mac or Fannie Mae before May 31, 2009.
- Ownership - Your home loan will need to be guaranteed or owned by Fannie Mae or Freddie Mac.
- No Lates - You will have to have had absolutely no 60 day late payments in the last year.
- Value to Loan Ratio - You'll have to still owe over 80% of your home's current estimated value.
- Solid History - You will need to have made your mortgage payments promptly over the course of the last six months, with no late payments on your history during that time.
- Current - You'll need to be current and up to date on your mortgage payments right now.
If you meet these basic requirements, you may be eligible for HARP assistance. Just by checking out a simple online resource or calling the HARP Approval Hotline, you can speak to a HARP Mortgage Lender and find out if you are eligible for a refinance through this program.
You should also keep in mind that changes have been made to the program. Today, it's actually possible to shop around and get a great interest rate and payment plan. You're not tied to just refinancing through your current lender. If you need help with your mortgage situation, this could be exactly what you need to get your head above water.
Benefits Of Getting Your Refinance With A HARP Mortgage
While there are plenty of other mortgage and mortgage refinance options out there, it's important to understand that the HARP Refinance Program offers some very real benefits to those looking into refinancing their home and making their monthly mortgage payments easier to fit into their budget. The recent updates introduced to the program by the Obama Administration are expected to open up additional refinancing opportunities to between 4 and 7 million homeowners.
An official statement on the Fannie Mae website states several things including that the goal of the refinance effort is to create low cost refinancing options for responsible homeowners who are suffering from the recent drops in home values. The overall plan is to help put those responsible homeowners in a better, more stable financial situation. The refinance can help lower monthly payments, drop interest rates, and help homeowners move away from risk loans like ARM loans or interest only loans. With these new loan solutions, which were announced in 2011, the results could be invaluable to homeowners.
2009 saw the introduction of the initial program from President Obama, but these efforts weren't as successful as the government had hoped. Mortgage rates were dropped significantly, but the issue was that homeowners couldn't take advantage of record-low mortgage rates due to home values. An estimated 10.7 million mortgages were 'underwater' - where the homeowner owed more on the loan than the home was worth - when the new updates were implemented.
These dropping property values meant that a different refinancing plan had to be created that specifically focused on the homes that had declined in value but still saw the same mortgage prices. The big changes made to the initial HARP program involved removing the maximum percentage amount placed on underwater mortgages and today a home is no longer capped by the 125% loan balance cap. The changes made to the program also eliminated a large number of fees that were once applied to refinancing a home mortgage.
With all of that in mind, it's easy to break down the benefits of refinancing through a HARP mortgage with a few key points.
- Less Hassle And Red Tape - With the removal of numerous hurdles standing in the way of homeowners, it's easier to get the refinancing loan you need. Red tape like appraisals, second lender subordination agreements, and more are all eliminated, leaving a clearer path to refinancing.
- No More Loan To Value Ratio Restrictions - The removal of the Loan To Value restrictions means that refinancing isn't held back by appraised value. Even if home values have dropped significantly it's still possible to get the kind of refinanced mortgage needed.
- No More Second Home Restrictions - Other restrictions have been lifted that once made it impossible for investors, landlords, and second homeowners to get HARP assistance. Now it's possible for these groups of people to receive help from the program too.
- Lower Fees And Rates - Lender participation is now a major part of the HARP refinancing program. This means that those looking to refinance aren't stuck with the same lender they're currently using. They're allowed to shop around, which in turn means that finding better deals is possible. And with the removal of several major fees that were once in place, it's less expensive to secure the mortgage you need.
- With the changes made in 2011 to the HARP program, the benefits of refinancing through HARP have only increased. There are plenty of excellent reasons to consider using the program, but the first one is still the most important - with HARP it's possible to drop monthly payments and bring your mortgage down to a more affordable level again. It could save your home and your financial future.
Getting Started With The HARP Refinancing Program
The HARP program is designed to be easy to use, easy to understand, and simple to qualify for . However, it's still a program that requires users to take some basic steps in order to ensure that they qualify and apply for. With a few simple steps it's easy to go through the HARP process with relative ease. And with many restrictions eliminated or removed, the simplicity of the process is even more apparent.
Here are the basic steps you'll want to take when you're getting started with the HARP program.
1. Determine Who Holds Your Loan - You'll need to ensure that your loan is held by either Fannie Mae or Freddie Mac, and determine which of the two it is that your loan is through. It's easy to figure out, and each of the companies has a simple loan lookup tool on their website that you can use to make this determination. Just visit the following sites and follow the simple steps:
2. Contact a HARP Mortgage Lender To Start The Process - Nearly all major lenders are qualified to participate in the HARP program, and as a result it's fairly easy to find a lender that can work with you. You'll actually be able to research your options and find the ones that offer the best rates for your current situation. There are several things that you'll want to keep in mind during the process, and a couple of options exist that will make it easy to find the right lender and get things going. Your options include:
- Contact a HARP Lender through the toll free number
- Check out your eligibility online
- Research other options including visiting lenders in person
Those are the only two steps you really need to take, but you'll want to remember some basic points concerning the program to make sure you get the right results from it.
The first thing to keep in mind is that it can take some time for your application to be approved. This is largely due to a steadily growing flood of HARP applications that have been submitted in recent months. It can take a bit of time, but it's well worth the wait. In most cases you can expect the process to take several weeks to complete from start to finish.
Be sure that you have all of your mortgage information together when you begin the application process and that it is as accurate as possible. Also make sure you spend some time looking at different rates. Your unique situation may have a direct impact on the loan you get. Already more than 1.5 million HARP loans were issued in 2012 alone, and plenty more are being issued in 2013. That highlights the fact that your odds of receiving your refinance loan will be better than ever.
If you're still unsure about different aspects of HARP, a few minutes spent online should give you the answers you need. With plenty of information readily available, learning more is straightforward, simple, and will take you one step closer to results.
As long as you remember that the process may take a bit of time and that locking in a specific interest rate will be something that is done once your loan is moved forward in the process a bit, you'll have the kind of results you want from the HARP program. It's already helped millions of struggling Americans get themselves out of an underwater mortgage and put themselves back where they need to be financially, and there's a good chance it will help you do the same.
Shopping HARP Lenders
While there's little doubt that a HARP loan could help you reduce mortgage payments and get your head above water again , there are so many different HARP lenders out there that it's absolutely a must to find the right one. Not only do you need to find a lender that offers the best rates and terms, but you also need to make sure you use one that can actually manage to close your loan instead of leaving you in a refinancing limbo.
The first step is simply to make sure you understand the basics behind the HARP eligibility requirements. These requirements are detailed at the MakingHomeAffordable.gov website. This can help you determine whether or not you should spend the time to find a good lender and begin the process.
But different banks have different criteria they use to determine which applicants receive their loans and which ones are turned down. And there are some cases where the period from application to closing date is much longer than most would prefer.
The basic guidelines on the site above can help you figure out whether or not you'll qualify for the loan, but banks use things like your credit score, a loan to value calculation, debt to income ratio, and much more to figure things out. This means that it can be hard to figure out which banks you should apply to and what to expect from them.
Luckily, some HARP lenders are actually specialists in the program, handling little else besides HARP applications and HARP loans. These experts generally make communication easier and can work with applicants effectively to get the right results.
Another point worth mentioning is that you shouldn't feel discouraged where HARP loans are concerned just because you were turned down for the first one you applied for. HARP 2.0 was introduced in 2011 to make it easier to qualify for these loans. If you applied for an early HARP loan and were turned down, there's a good chance you may qualify for this one.
Questions To Ask About Your HARP Lending Expert
Once you're ready to start the process of applying to different HARP lenders , you'll need to keep some basic questions in mind. Ask yourself these questions - or better yet, ask the lender - to get a better idea of which of the many lenders is right for you. Since you can now actually shop around to get the perfect loan, these points are very important.
1. Are there any Loan to Value caps in place at the lender which could reduce your chances of getting approval? - While there are many different lenders that have happily accepted the change to HARP stating that no LTV caps are required, many others still keep an LTV cap in place. Usually, the Loan to Value ratio will be capped at 105, 125, or 150 percent. This means that in some cases a loan that is for more money than a home is worth may be denied due to that simple LTV issue. You'll want to be sure you're applying for a loan that you can qualify for, so be sure to find out more about the LTV ratio before you go through the process. And remember that even if you find a LTV cap-free lender, the higher your LTV is, the longer it will take to close your loan in most cases.
2. Do any servicing restrictions on HARP 2.0 origins exist? - While plenty of lenders offer HARP loans, many large banks only offer the loans when the monthly payments are being made to them. In other words, you may have a preferred bank and that bank may have been where your loan began, but it could have been sold during the life of the loan. This means that in some cases the original lender can't refinance. Start the process by making sure you're submitting your application to a company that has no restrictions - or at the very least, be sure you understand those restrictions before you start.
3. Are there any FICO score caps that could hinder your chances of getting approval? - In many instances, banks set a restriction on credit scores that are actually tougher than their normal guidelines. Scores lower than 720 could give you trouble, depending on the lender you choose to use. In most cases, FICO scores need to be higher the higher that loan to value ratios are. Find out more about credit score restrictions when you apply to make sure you don't get greeted with a nasty surprise.
4. Are any occupancy restrictions in place for second homeowners? - While HARP 2.0 loans are possible for investors, landlords, and second home owners, many lenders still don't want to offer loans to these groups of people. Many lenders prefer to only offer HARP loans to those using their home as a primary residence instead.
5. Will Private Mortgage Insurance pose a problem when getting approved? - Many lenders prefer to handle mortgage insurance themselves, but there is a growing number that are happy to work with those who have a PMI policy in place on their mortgage. Take a minute to mention this point to your lender so you can ensure that you won't encounter any issues when the application process begins.
6. Are there any property type restrictions that could prevent approval from happening? - here are plenty of different types of homes - condos, duplexes, town homes, and more. HARP 2.0 is designed for any type of home, and no matter what property type you own , you'll meet the official eligibility requirements. However, some lenders may have restrictions on property types. Be sure to find out whether or not your lender will allow your property type.
7. What are the interest rates - This is a big question when getting any type of loan, and it's just as important when applying for a HARP loan. Be sure to research and find out exactly what kind of rates are the best ones at any given moment so you will be able to get a better idea as to just what kind of rates you should expect. A problem does exist wherein interest rates aren't locked in until later in the approval program, usually after approval has been found. With some HARP loan applications taking several weeks to gain approval, the rate may change from the time you apply to the time you are actually locked in to the loan. Be sure to keep this in mind. A Good Faith Estimate could give you a clear idea of what kind of interest rate to expect, and in most cases it will be lower than the rate you're currently paying. However, you'll still need to understand the basics of why your rate may increase from that initial quote.
HARP 2.0 has already helped out millions of homeowners, and there's a good chance it will help you as well. Do a bit of research, check out each lender carefully, and you'll find the one that is perfect for you and your situation.
Obama Mortgage Program Overview
In the weeks, months, and years following the housing market collapse in the late 2000s, millions of Americans found themselves struggling to make mortgage payments or with mortgages that were far more than their homes were now worth. As a result, many different programs began to appear that were intended to help these Americans improve their situation. One that has helped millions and continues to be used is the HARP Mortgage Program.
Learning more about the HARP Mortgage Program is a must for homeowners looking to understand how to help their situation and escape from underwater mortgages and other issues. The following information could give you the answers you need and find out more about the reason HARP exists and its history.
Explanation Of How The New HARP Program Will Help Homeowners Duration : 0:4:35
HARP is a federal program set up by the Federal Housing Finance Agency as part of President Obama's stimulus plan. It is part of the Making Home Affordable Program, which was designed to help Americans with underwater mortgages. HARP stands for the Home Affordable Refinance Program and is also referred to as HARP 2.0, the Obama Refinance Plan, or DU Refi Plus. No matter the name you give it, it's a program that has already helped millions.
The HARP program's initial design was set up specifically to help out homeowners who were dealing with underwater mortgages - those who had a home that was worth less than they actually owed on their mortgage. When the housing crisis and economic downturn occurred, it resulted in serious problems in the housing industry. Home values rose while those with variable rate mortgages and other higher rate mortgages saw their interest rates skyrocket. Mortgage payments doubled or tripled, and families were left owing more than their home was worth. Many others found themselves facing huge payments due to unstable mortgages like those based on adjustable interest rates. HARP was intended to offset these issues and help families avoid them outright.
The initial design managed to help a large number of homeowners get better interest rates, lower their payments, and get out of risky adjustable rate mortgages. But there was a major issue with the plan - the negative equity celling. This stipulation meant that the loan to value ratio had to fall under 125%. With home values plummeting during the downturn, this meant that the number of Americans who qualified for help from HARP was initially much lower than estimated. In fact, in an address to the nation President Obama admitted that the program had come up short of its initial goals and that several key points of the program were holding it back from its full potential - most notably the equity ceiling issue. Home values were steadily dropping, and more and more people found themselves ineligible to receive assistance through the HARP program.
After this shortcoming of the HARP program was understood, the program was redesigned, retooled, and revised to its current state. Now known as HARP 2.0, this redesigned program was introduced in October 2011 with one clear goal in mind - eliminating refinancing roadblocks that millions of Americans were hindered by. By changing some of the basic guidelines for eligibility, the program was suddenly much easier to be approved for.
The big change was the total elimination of the equity celling requirement in the program. Experts estimated that this single change was enough to make it possible for between 4 and 7 million homeowners to qualify for HARP assistance, which also meant that they would be able to lock in the lowest interest rates in history. Some estimates place yearly savings on mortgage payments at around 3,500 dollars, making it easier for millions to meet monthly bills comfortably.
Who Qualifies For HARP?
With that in mind, it's easy to see how the HARP program can help homeowners out. The first step will be figuring out just who qualifies for the HARP program and what it offers. Once you make sure that you will be able to qualify for the program you'll be able to make your application and get started towards escaping the stress that an underwater mortgage can place on you. The basic qualifications for HARP include the following:
- The current home loan can't have already been financed previously by HARP - in either of its iterations.
- The home loan must be one that was purchased or guaranteed by either Freddie Mac or Fannie Mae prior to May 31st, 2009. Those secured later than that date aren't eligible for the program.
- There is no restriction on property types, and single family homes, multifamily units, condos, townhomes, and even planned unit developments are eligible for HARP.
- All occupancy levels also qualify. Even second homes and investment properties are eligible for the program, and many landlords and owners of vacation properties have used HARP.
- The mortgage history for the loan must be good - only one 30 day late payment is allowed over a twelve month period and there can be no late payments whatsoever over the prior 6 month period.
- In order to qualify, the new HARP mortgage must offer lower interest rates, lower payment levels, a reduced mortgage term, and a stable, fixed-rate loan structure instead of adjustable rates.
- Debt to income ratio for the applicant can't exceed 45%.
- New HARP payments that are greater than an existing mortgage payment by more than 20% will rely on income and credit as the primary factors in the loan.
- HARP mortgages are restricted by county conforming limits. Those who are financed at 100% loan to value ratios at prior conforming limits will have to pay down the loan when their HARP mortgage closes in order to qualify for the loan.
- Private mortgage insurance will not disqualify applicants. However, some lenders may not accept applications with private mortgage insurance. If an existing loan has private coverage, the same level of coverage will need to be maintained with the new HARP loan. In general, lending experts will help with this sometimes confusing point.
- Second mortgages still qualify as well, as long as second mortgage holders agree to re-subordinate. Additionally, the new HARP mortgage can't exceed the 125% loan to value limit if it is being used to refinance a second mortgage. Also, second mortgages cannot be paid off by using proceeds from a new HARP mortgage.
Without question, the rules have changed and it's easier than ever to qualify for a HARP loan. Now that the equity requirement has been eliminated, the main factor in qualifying for a mortgage refinance through the HARP program isn't credit or income, but mortgage payment history. This is because HARP is designed for responsible homeowners who have made their payments as required, but who have become trapped in an underwater mortgage due to falling property values. As such, there can be no late payments made on a mortgage in the prior 6 months and only one late payment made in a 12 month period. This is the main factor in determining qualifications for a HARP.
HARP was developed so those who have seen their home values plummet have a way to change their circumstances. Those who are at above 80% loan to value for a primary residence or above 75% for second homes are the primary targets of this program, and should take advantage of it as soon as possible to enjoy a number of benefits. Those benefits include:
- Reduced mortgage term so loans can be repaid quicker
- Lower monthly interest rates
- Lower monthly interest rates and payments for lower monthly mortgage bills
- Much more stability - no more adjustable rates or interest only loans. It's a better loan in all respects.
One thing that homeowners need to remember is that they need to continue making mortgage payments in a timely manner after applying for a HARP mortgage and while waiting on it to be approved. It can take several weeks for approval and to close the mortgage, and during this time it's a must to pay all mortgage payments on time. Otherwise, homeowners may destroy their chances of qualifying for the HARP loan. Any lending professional who advises that a homeowner wait on making any scheduled payments is doing them a great disservice.
Homeowners should also keep in mind that they are not required to use their existing lender to get a HARP mortgage. This is an issue that is growing in frequency, and some unscrupulous lenders attempt to make it seem as though they are a homeowner's only option when in fact the HARP 2.0 program makes it quite clear that homeowners are encouraged to actively compare lenders, look at different interest rates, and find the lending company that works best for their situation. This way it's possible to get the perfect mortgage.
Also, the issue of private mortgage insurance is one that seems to cause some confusion as well. With HARP mortgages, private mortgage insurance is allowed. Some lenders have recently been noted to have told homeowners that private mortgage insurance will disqualify them for a HARP mortgage. This isn't true, and if your lending professional has said anything to the contrary it is important to consider finding a new professional to assist you in finding the right HARP mortgage for you.
HARP Mortgage Basics:
The primary reason that HARP was created was to help homeowners with negative equity caused by the housing market crash of the late 2000s. Negative equity is essentially a term that means a homeowner owes more on a mortgage than what a home is actually valued at. For instance, if your mortgage is currently $150,000 but your home has an estimated value of $110,000, you have negative equity. This can be incredibly stressful, and it's a problem that became all too common after the housing crisis occurred.
With that in mind, HARP was designed to help those who owed more than 80% of the value of their home. In most cases, refinancing this type of loan would be almost impossible and as such HARP has its own guidelines that make it much easier to qualify for when negative equity is an issue.
Today's interest rates are still at near-record levels, and taking advantage of those levels could save you thousands each year. As a result, it's easy to see why more than 1 million homeowners have taken advantage of the program. Additionally, 30 year mortgages often mean that the bulk of your payments are applied to the interest rates and little else. 20 and 15 year loans are different, and more of the payments are applied towards the principle. As a result, refinancing through a HARP program could lead to faster completion of a loan and less of your money going only to interest rates.
Property Types and Occupancy Types Accepted By HARP
In many other refinance situations, occupancy type or property types could be an issue. But HARP eliminates these restrictions as well. Non-owner occupied homes and second homes are also allowed to receive HARP refinance loans. This means that investment properties, rental properties, and second homes can all be refinanced through the program. The only limitation is that the loan to value ratio for HARP loans will start at 75% instead of the 80% level that it begins at in cases of owner occupied homes.
Investment properties, rental properties, and vacation homes were a huge part of the housing market failure. During the downturn, some lenders worked on loan modifications and continue to do so. But these lenders were rare, and it was very common for investors or second homeowners to find that they couldn't get refinanced just because they held underwater mortgages. As a result, they were often forced to let these properties go into foreclosure. This strained lenders, and actually resulted in many renters finding themselves searching for a new place to live.
HARP offers a chance for these property owners to get help as well, and using it could drastically help reduce interest rates, lower monthly payments, and better loan terms in general. It has already begun to slow the number of investors or landlords who have simply abandoned their properties, and has also helped second homeowners keep their properties in place as well.
This means that more Americans are able to keep their properties instead of having to default on them. In the past, homeowners have had to walk away from vacation homes or rental properties in order to keep their primary home. This hurt not only homeowners, but banks who suddenly found themselves with a vast number of foreclosed properties that were once vacation or second homes. But with this aspect of HARP in place, it's much easier for homeowners to keep their homes no matter which property they are. As long as homes meet the requirements listed above, it's possible to receive HARP help.
LAdditionally, there is no limit to the number of properties financed through HARP and there are no restrictions to the type of homes. This means that condos, townhomes, manufactured homes, and single family residences are all eligible for the HARP program. In other words, the type of home and the type of occupancy it has means very little.
Who Is Not Eligible For a HARP Mortgage?
There are a few things that will make one ineligible for a HARP mortgage. While most will find that they reach the basic qualifications, a few things could cause one to be denied for their HARP loan. It's important to know whether or not you're eligible so you don't waste time filling out applications only to find that you don't meet the basic requirements. With that in mind, learning the things that could make you ineligible is important. Several issues may cause you to be denied for HARP. These circumstances include:
- Homeowners who do not have a Fannie Mae or Freddie Mac loan.
- Those whose loan was funded by Fannie Mae or Freddie Mac after May 31st, 2009.
- Homeowners with any late payments in the last 6 months or more than one payment in the last 12 months
- Homeowners who have already refinanced their loan through HARP in the past
- Homeowners that are in foreclosure
- Homeowners with USDA, VA, or FHA loans
- Situations where the loan will not lower interest rates, lower payments, result in shorter mortgage terms, or provide more stable loan structures by moving from adjustable rate mortgages.
- Mortgages that will see increases in payments of more than 20% with a debt to income ratio of more than 45% or what the system determines is eligible.
If any of these circumstances are in place, one will likely not qualify for the HARP mortgage. But for those who meet the basic requirements, applying for and receiving a HARP refinance could be exactly what is needed to help get above water and stay there. It's a great program, and more than 1.5 million Americans have already taken advantage of it.
If your home loan is held by Fannie Mae or Freddie Mac and you meet the basic requirements listed above, you may need to consider applying for HARP and finding out if you can take advantage of what it offers.
If you need help determining whether or not your loan is owned Fannie Mae or Freddie Mac, the following pages will connect you with a HARP Mortgage Lender who will be willing to assist you: