HARP loans: Don’t let an underwater mortgage hold you back!
HARP Loans: Don't Let an Underwater Mortgage Hold You Back!
If you're a homeowner and find yourself struggling to keep up with your mortgage payments, you're not alone. Over the last decade, many homeowners found themselves in a similar situation when the value of their homes plummeted during the housing market crash. Many homeowners were left with underwater mortgages, meaning they owe more on their mortgage than their home is currently worth. But don't lose hope – there are options available to help you refinance your mortgage and keep your home.
What Are HARP Loans?
HARP loans, or the Home Affordable Refinance Program, were created in 2009 to help homeowners with underwater mortgages refinance their existing mortgages. The program was designed to help homeowners take advantage of historically low interest rates, even if their homes were worth less than their mortgages.
To be eligible for a HARP loan, your mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac, and you must have taken out your loan before May 31, 2009. Additionally, 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.
The Benefits of HARP Loans
The main benefit of a HARP loan is the ability to refinance your mortgage, even if you owe more than your home is currently worth. This can result in lower monthly mortgage payments and a lower interest rate. Additionally, HARP loans typically require less documentation and may have lower closing costs than a traditional refinance.
Another benefit of a HARP loan is that it can help you build equity in your home. If you're currently paying a high interest rate on your mortgage, a HARP loan can help you refinance to a lower rate and save money over the life of your loan. This can help you build equity in your home faster and potentially help you sell your home down the line for a profit.
The Drawbacks of HARP Loans
While HARP loans can help homeowners refinance their mortgages and save money, there are some drawbacks to consider. If you refinance your mortgage through the HARP program, your new loan will have a term of either 15 or 30 years, which means you may be extending the life of your mortgage.
Additionally, if you have a second mortgage, like a home equity line of credit, you may not be eligible for the HARP program. You should also keep in mind that while HARP loans are designed to help homeowners with underwater mortgages, there are other options available to refinance your mortgage, including traditional refinancing and federal housing programs like FHA loans.
How to Apply for a HARP Loan
If you think you may be eligible for a HARP loan, the first step is to contact your mortgage lender or a HARP-approved lender. You'll need to provide documentation about your income, employment, and mortgage history, and your lender will determine if you're eligible for the program.
If you're approved for a HARP loan, your closing costs may be rolled into your new loan, so you won't need to pay them upfront. You'll also need to complete a home appraisal to determine the current value of your home, which will be used to calculate your new interest rate.
Final Thoughts
Overall, HARP loans can be a great option for homeowners with underwater mortgages who are looking to refinance their loans and save money. However, it's important to weigh the pros and cons of the program and consider all of your options before making a decision.
If you're struggling to keep up with your mortgage payments and are looking for help, be sure to reach out to your mortgage lender or a housing counselor to explore your options. With the right guidance, you can take control of your finances and find a solution that works for you and your family.