Good news for underwater homeowners — HARP is extended!
The Federal Housing Finance Agency (FHFA) announced that the HARP, otherwise known as Home Affordable Refinance Program, will be extended through December 31, 2018.
In addition to the HARP extension, the agency informed the public of modifications made to High LTV Streamlined Refinance. These changes aimed “to provide much-needed liquidity for borrowers who are current on their mortgage but are unable to refinance because their loans have LTV ratios that exceed the Enterprises’ maximum limits.”
The Government-Sponsored Enterprises (GSE), Fannie Mae and Freddie Mac has extended HARP to allow qualified homeowners with high LTVs to have an accessible refinance option. This will make it easier for both borrowers and lenders to transition from HARP to the High LTV Streamlined Refinance.
Modifications made to the High LTV Streamlined Refinance is set to begin on October 1, 2017. This will be implemented by the GSEs as mandated by the FHFA.
What is an Underwater Mortgage?
It simply means that the mortgage is ‘underwater’ because the mortgage balance is higher than the home’s market value.
The problem with an underwater mortgage is that it prevents the homeowner from selling the property or refinancing the loan. These types of mortgages became common after the 2000s housing bubble. When the bubble burst, it took its toll on many homeowners by leaving them with underwater mortgages.
How Does HARP Come Into the Picture?
HARP is a program that allows underwater homeowners to refinance existing mortgages. Through it, qualified borrowers can now avail of lower interest rates and more favorable terms. This allowed them to get out of being underwater to building positive home equity.
HARP remains to be one of the most successful post-recession refinance programs for underwater mortgages. To this day, it still helps many American homeowners get back on their feet after the crisis.Refinance your mortgage with HARP, Click here.
Why Take Advantage of HARP?
Why not? Saying no to HARP is like refusing to save over $250 a month on your mortgage payments.
Like any other refinance loans, HARP requires applications to go through underwriting and pay refinancing fees. What sets it apart from them is that it does not require the borrowers to have equity in their homes.
It also does not require mortgage insurance. While almost all other refinance loans require a mortgage insurance of an equivalent thereof, HARP does not. Mortgage insurance is costly. Not having to pay for one means you have more money going towards your mortgage payments.
The closing costs are lower with HARP. this is because it is capped. Again, that can translate to savings for qualified borrowers.
Most importantly, HARP offers lower interest rates and shorter terms. This makes HARP a very attractive loan option for many homeowners.
How Do You Refinance With HARP?
For starters, the mortgage has to be owned or guaranteed by either Fannie Mae or Freddie Mac.
Not all underwater homeowners can get a HARP loan. Only those who have been responsible for making payments diligently can qualify. This means that their payments should be current. Moreover, there shall be no payment more than 30 days late in the last six months. These should be no more than one late payment within the last 12 months. The property has to be the borrower’s primary residence for it to be eligible.
The HARP can only be used once. If you have taken this loan in the past, this no longer is an option for you.
While HARP is still available, it is best to take advantage of it. It would also be wise to learn about the High LTV Streamlined Refinance which will eventually take HARP’s place, with better guidelines and more advantages.