The HARP loan program was enacted to help homeowners throughout the country refinance after they had lost equity in their homes due to the market crashing. If you owe more than 80% of your homes current value,you may qualify for HARP. Mortgage interest rates are low and it is an excellent way to refinance and reduce your monthly mortgage payment while fixing in your long term interest rate.
While the program has been available for a couple of years man homeowners still do not understand the program and how it can help them. Here are the facts you need to know about HARP and how it can help your family.
1. HARP is for people that owe more than 80% of their homes current value. There is no cap to the percentage that you owe. There is only a minimum. That means if you owe 150% of your home’s value you can use HARP where if you owe 78% of your home’s value you would not qualify.
2. If you are not paying private mortgage insurance now, it will not be added to your loan at closing. This is good news for homeowners that used to have 20% or more equity in their home. HARP does not penalize you for losing that equity by adding on PMI.
3. You can use a new lender. You do not have to stay with your current one.
4. In order to qualify your mortgage loan needs to be owned by Fannie Mae or Freddie Mac,and it needs to have closed after May 31st, 2009. If you have an FHA or VA home loan,there are streamline refinances you can use instead.
5. HARP is for first mortgages only.
6. The lender will typically use an automated valuation program to determine your home’s value instead of getting it appraised. This saves you money.
7. Your mortgage loan needs to be paid on time within the past 12 months.
8. The loan limit is based on the conforming loan limit for your area. It is typically $417,000 but goes up in some metropolitan areas. Speak with your mortgage lender for exact details for your zip code.
9. You cannot get any cash out with HARP. You can only refinance the existing balance.
10. You can include closing cost in the loan at closing.
This loan program is fairly easy to use and an excellent way to save money. One of the requirements of this program is that it needs to save you money on a monthly basis. A mortgage lender may approve your loan if it doesn’t save you money but does take you from an adjustable rate mortgage to a fixed one. For homeowners that want a long term fixed interest rate this program is a great bet. While you can’t get cash out, you can lock in your interest rate for 30 years which will give your family peace of mind.
To learn more about HARP and refinance your home speak with your mortgage banker. Interest rates are low so now is a great time to save.