Buying a home is like fulfilling a long held dream. The mortgage facilities of lenders help the borrowers in making this dream come true. But how will you feel if due to political, social and geographical and other uncontrollable factors the value of your home falls below your invested amount! Heart breaking it is! This is where schemes like Home Affordable Refinance Program (commonly called as HARP) come to your rescue! You may have heard of this scheme and in this post we will provide you deep insight on what it actually means and where can you place it to avail maximum benefits.

What is HARP?

HARP is a federal program which allows you to take benefit of market correction in the mortgage you owe. Under HARP, you can opt for refinancing of your mortgage at the new interest rates as you owe much more than the worth of your home.

Are you eligible?

The revised norms of this scheme have expanded its horizons and now large number of people is eligible for this program. Here are few noted eligibility criteria!

  1. The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae. Freddie and Fannie are not prima facie to the public and it is possible that you may not be aware of the fact that your mortgage is linked to them, thus it is always wise to check the same with your lender to avoid any ambiguity.
  2. You are eligible for this, no matter you are holding your home as primary house, secondary house or just as an investment property! HARP is independent of the usage of home.
  3. If the current loan to value ratio comes to be greater than 80%. For instance if the value of outstanding loan amount is $110000 and the value of your home has plummeted to $100000 then loan to value ratio is first divided by second i.e., 110% which is more than 80% and thus you are eligible.
  4. You should have a good track record of payment. In other words, you should be current on your payments! The terms mention that there should not be delay of more than 30 days in the payments made in last 6 months and no more than one late payment in the past 12 months.
  5. There is no condition of minimum credit score and thus you can opt for this without worrying about your score!

How can you be benefited?

If the value of your home has fallen to the extent that the debt you owe is more than the market value then it is the decent right which you should have to take benefit of lower interest rates in the market. HARP allows you to get this loan refinanced either through your current lender or through any other lender if original lender is not ready to refinance. You can be benefited by lower monthly payments or movement to fixed rate mortgage instead of adjustable rate mortgage. Along with this the closure costs are bundled up with the loan amount which means that you don’t need much cash upfront!

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