The pros and cons of HARP loans
The Pros and Cons of HARP Loans
If you're a homeowner struggling to make mortgage payments, you may have heard about the Home Affordable Refinance Program, or HARP. HARP loans are designed to help homeowners refinance their mortgages and stay in their homes, even if they owe more than their home is worth.
The Pros of HARP Loans
Lower interest rates: HARP loans offer the potential for lower interest rates, which can help homeowners save money over the life of their loan.
No appraisal needed: Unlike some other refinance programs, HARP loans don't require an appraisal, which can save homeowners time and money.
No mortgage insurance: HARP loans don't require mortgage insurance, which can be a significant cost savings for homeowners.
Extended payment terms: HARP loans offer extended payment terms, which can help homeowners reduce their monthly mortgage payments.
Foreclosure avoidance: By refinancing through HARP, homeowners facing foreclosure have the opportunity to keep their homes.
The Cons of HARP Loans
Not everyone qualifies: HARP loans are only available to homeowners who meet certain eligibility requirements, including being current on their mortgage payments.
Restrictions on loan types: HARP loans are only available for certain types of mortgages, including Fannie Mae and Freddie Mac loans.
Can't reduce principal: HARP loans don't allow homeowners to reduce the principal balance of their mortgage. The goal is to help homeowners reduce their monthly payments, not their total debt.
Potential for high upfront costs: While HARP loans don't require an appraisal, they may still come with significant upfront costs, including application fees and closing costs.
No impact on credit score: Refinancing with HARP won't improve your credit score, so homeowners should consider this before making a decision.
Overall, HARP loans can be a great option for homeowners who are struggling to make their mortgage payments. However, it's important to weigh both the pros and cons before making a decision. If you're considering a HARP loan, be sure to consult with a mortgage professional to determine if it's the right option for you.