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HARP Can Help Borrowers with First and Second Mortgages

By B Wood
Mar 26th, 2013

harp helpMortgage interest rates are at historic lows and refinancing now can save you hundreds every month and thousands over the life of your loan. The challenge for many home owners is that they want to refinance but don’t think they can due to a decline in their homes value or having more than one loan on the property. The good news is that this loan program was designed for you. If your home value has declined it does not matter. If you have a second mortgage, that is okay too.

HARP Program Qualifications

Currently paying your mortgage on time
Have less than 20% equity
Have a Fannie Mae or Freddie Mac loan

Instead of requiring you to have a lot of equity, the HARP 2.0 program is designed for people that do not have very much equity left in their home. Additionally there are debt to income requirements that make it so your debt to income ratios (how much you owe every month compared to how much you make) has to be over 31%. They have recently adjusted the guidelines so people with a 31% debt to income ratio or lower may qualify, but the idea is that homeowners who cannot afford their current loan can reduce their interest rate and make the loan affordable. These modifications are available and an ideal way to help your family have enough money to keep making payments on time while taking care of your other bills.

The government has also come out with a home loan modification program for second mortgages. If you qualify for an interest rate reduction through a HARP refinance you could go back and try to get a principal or interest rate reduction on your second mortgage as well. This unique program came out because many home owners could afford to pay their first mortgage, after refinancing, but could not meet their second mortgage obligation. The overall goal of Making Home Affordable and HAMP is to help home owners stay in their homes and afford to live, thereby reducing the foreclosure rate. An experienced mortgage lender can go over the variety of programs that are available and show you how to save money by participating.

Refinancing your home loan is a smart way to save money. By lowering your monthly interest rate you will reduce your monthly payment and have more money available for other bills and necessities like food, gas, and the electric bill. If you are currently struggling to make ends meet or tired of not having any extra cash contact a mortgage banker to see if the HARP refinance program is right for you. If it isn’t they can inform you of other refinance options that may be better suited to your needs. There are FHA streamline refinance programs and VA home loans that are helping home owners as well. Regardless of whether you use HARP, the FHA, or the VA to refinance – today’s interest rates are low enough that if you got your loan a couple of years ago you will save money. Call and speak with a mortgage banker today to review your options.