HARP loans: A solution to underwater mortgages!
If you own a home, you know that a mortgage is most likely your biggest monthly expense. And if you're underwater on your mortgage, meaning you owe more on your home than it's worth, you may be wondering what options you have to get out from under that debt. Fortunately, there is a government program that can help: the HARP loan.
What is a HARP loan?
HARP stands for Home Affordable Refinance Program. It was created by the government in 2009 to help homeowners who were underwater on their mortgages refinance into new, more affordable loans. HARP loans are only available for mortgages owned or guaranteed by Fannie Mae or Freddie Mac, and they have specific eligibility criteria.
Who is eligible for a HARP loan?
To be eligible for a HARP loan, you must meet the following criteria:
- Your mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac.
- Your mortgage must have been originated on or before May 31, 2009.
- Your current loan-to-value (LTV) ratio must be greater than 80%.
- You must be current on your mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months.
- You must be able to afford the new mortgage payments.
If you meet these criteria, you may be eligible for a HARP loan. You can check if your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac on their websites.
What are the benefits of a HARP loan?
The main benefit of a HARP loan is that it can help you refinance into a more affordable mortgage, even if you're underwater on your current one. This can save you money each month on your mortgage payments and help you avoid foreclosure.
In addition, HARP loans have the following benefits:
- No appraisal is required in most cases, which can save you time and money.
- No minimum credit score requirement, although individual lenders may have their own guidelines.
- No need to obtain new mortgage insurance, even if your LTV ratio is greater than 80%.
- Streamlined application process.
How can I get a HARP loan?
If you meet the eligibility criteria, you can begin the process of applying for a HARP loan. The first step is to contact your current mortgage servicer or another lender who participates in the HARP program.
They will ask you for information about your current mortgage, including your loan balance, interest rate, and monthly payment. They will also need to verify your income and employment status, as well as your credit score and history. Based on this information, they will determine if you're eligible for a HARP loan and what your new mortgage payment would be.
If you're approved for a HARP loan, you will need to complete the application process and provide any additional documentation required by the lender. Once the loan is approved, your current mortgage will be paid off and you will start making payments on your new, more affordable mortgage.
Conclusion
If you're underwater on your mortgage, a HARP loan may be a solution to help you refinance into a more affordable mortgage and avoid foreclosure. While there are specific eligibility criteria, many homeowners have been able to take advantage of this government program and save money each month on their mortgage payments. Consider exploring your options and speaking with a lender who participates in the HARP program to see if you qualify.