Today we are talking about home loans. HARP stands for home affordable refinance program. HARP program or harp loan program is a federal program of the United States. This program helps people whose loan-to-value ratio exceeding 80%, These people can opt for refinance without paying for mortgage insurance. Some change took place in HARP loan program later in 2011 which is known as HARP 2.0.
HARP Loan program - Loan to value ratio Explanation
An example from wikipedia - Suppose a house that was once purchased for $160,000 but is now worth $100,000 due to the market decline. Further, assume the homeowner owes $120,000 on the mortgage. In this scenario, the loan-to-value ratio would be 120%, and if the homeowner chose to refinance, he would also have to pay for private mortgage insurance.
If the homeowner were not already paying for PMI,(PMI stands for private mortgage insurance) the added cost could nullify much of the benefit of refinancing, so the homeowner could be effectively prohibited from refinancing.
HARP Loan program - Eligibility
Here is the five basic requirements to be full filled by the customers to be eligible for HARP Loan program.
- Firstly your loan should be owned by Freddie Mac or Fannie Mae. The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are both Government Sponsored Enterprises (GSEs), which provide liquidity to the thousands of banks, savings and loans, and mortgage companies that make loans to finance housing. If you are unaware of your mortgage organization, Then you can check out these tools to know your mortgage company is linked to either Freddie Mac or Fannie Mae. Fannie Mae loan lookup tool & Freddie Mac loan lookup tool.
- The mortgage must have been acquired by Freddie Mac or Fannie Mae on or before May 31, 2009.
- The homeowner must be current on their mortgage payments, with no 30-day late payments in the last six months and no more than one late payment in the last twelve months.Use the loan look-up tools to view the date.
- Your current loan-to-value (LTV) ratio must be greater than 80%. Calculate your LTV ratio with this tool.
- Occupant should be a primary residence (owner-occupied), second home, or investment (rental) property. HARP 2.0 refinancing of investment properties by Fannie Mae and Freddie Mac has higher mortgage rates than for owner-occupied properties.
HARP Loan program Benefits
- You are not required to pay mortgage insurance, even if you owe significantly more than your house is worth.
- HARP underwriting guidelines are significantly more lenient than those of traditional refinance loans.
- There is no appraisal requirement
- Lower closing costs
- HARP loans offer more attractive mortgage terms and conditions.
HARP Loan program Important links and tools
Here are the tools you can use for HARP loan program
If you have more questions on HARP Loan program please visit the links below
HARP Loan program other details
Please Be sure and check your address on both the Fannie Mae and Freddie Mac lookup tool. If your address does not appear in the lookup tool of either site, your loan is not owned by Fannie Mae or Freddie Mac and you are not eligible for the program.
HARP has been significantly enhanced since it launched in 2009. The program now requires less documentation and has simpler guidelines, all designed to approve more loans. So take the advantage.
HARP 3.0 has not yet passed but is expected to expand HARP's eligibility requirements to homeowners with non-Fannie Mae and non-Freddie Mac mortgages, including homeowners with jumbo mortgages and Alt-A mortgages, those whose original mortgages were stated income, stated asset, or both.
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Sources: wikipedia,harp.gov, embracehomeloans.com