“HARP”, stands for; “Home Affordable Refinance Program” and is a federal refinance program targeting homeowners that own properties that are valued less than the mortgage. The federal government began the program in March 2009, and is designed for those homeowners, who are (1) current on their mortgage payments, and (2) who haven’t been able to refinance because they have limited equity, no equity or negative equity in their homes.
Do I qualify?
First, a HARP loan is not unlike a conventional mortgage, because they are both backed by Fannie Mae and Freddie Mac. This means that the underwriting process will resemble that of any other conventional mortgage. As always, there are loan disclosures to sign and supporting financial documentation to submit. As with a conventional mortgage, lenders are looking for borrowers with solid incomes, good assets and quality credit scores. Below is a list of the basic requirement.
- The mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac
- The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009
- Borrowers must be current on their mortgage payments with no payments more than 30 days late in the last six months and no more than one late payment in the last 12 months
- Eligible property types are primary residence, one-unit second home and one-to-four-unit rental property
- The current loan-to-value (LTV) ratio must be at least 80 percent. There is no maximum LTV limit for a new fixed-rate mortgage. The maximum LTV for a new adjustable-rate mortgage is 105 percent. Check your LTV at; http://www.iwantabettermortgage.com/calculator.php
- You cannot have previously refinanced under HARP (unless it was a Fannie Mae loan refinanced under HARP between March and May 2009)
How can I best prepare to refinance with a HARP loan?
- Ensure Fannie or Freddie backs your mortgage
Fannie Mae and Freddie Mac each have a loan lookup tool which allows homeowners to search for their loan: To check if your mortgage is backed by Fannie Mae, visit https://knowyouroptions.com/loanlookup. If your mortgage is not found, try Freddie Mac’s loan lookup at https://ww3.freddiemac.com/loanlookup/.
Mortgages not listed on either website are not backed by Fannie Mae or Freddie Mac and, therefore, are not HARP-eligible.
- Is mortgage is old enough
Only those whose mortgages were securitized prior to June 1, 2009 can apply for HARP. In general, this means that your mortgage must have started in mid-May 2009 or earlier. You can find your mortgage start date by looking at your closing paperwork.
- Is my mortgage insured?
HARP is designed to help homeowners with or without private mortgage insurance (PMI) and lender-paid mortgage insurance (LPMI). The general rule of thumb is that if you have mortgage insurance, your new HARP mortgage must have the same level of coverage.
- Am I current?
HARP requires that all homeowners have made their last six mortgage payments on time, with a maximum of one 30-day late payment in the past year. This information is verified against your credit report, so be sure to review your credit reports prior to submitting your HARP application.
- Is my paperwork in order?
Since HARP mortgages are underwritten like every other type of mortgage, you will be required to provide bank statements, a driver’s license, homeowners insurance information, pay stubs and W-2s. If you’re self-employed, you’ll have to provide a few years of tax returns to verify your income.
Who doesn’t qualify for HARP?
While the HARP program has evolved over the years to allow more borrowers to qualify, there are still several reasons why you wouldn’t qualify for HARP, including:
- Bad credit. Some borrowers can’t qualify due to impaired credit or too many late payments on their existing mortgage.
- Equity issues. HARP has no maximum LTV ratio for borrowers who obtain a new fixed-rate mortgage, a maximum LTV ratio of 105 percent for borrowers who get a new adjustable-rate mortgage, and a minimum LTV ratio of 80 percent for all loan types. However, lenders typically impose their own guidelines, called “overlays,” which may include different LTV rules.
- No re-HARPs. Homeowners can only utilize the HARP program once.
- Fannie and Freddie. You will not qualify for HARP if your mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac.
What you need to do first is go online to websites like; iWantaBetterMortgage.Com to check out current mortgage rates.
Can I refinance a first and second mortgage through HARP?
In order to refinance both a first and second mortgage through HARP, you must meet two additional requirements, according to MakingHomeAffordable.gov:
- The lender that holds the second mortgage must agree to remain in junior lien position
- You must be able to meet the new payment terms of the first lien mortgage, and demonstrate your ability to do so
Can I refinance a rental property through HARP?
In most cases the answer is “yes”.
Am I eligible for HARP despite my recent bankruptcy?
Recently, Fannie Mae has removed the “requirement that the borrower meet the waiting period and re-establishment of credit criteria in a bankruptcy or foreclosure.
Time is running out. Take advantage of the program by starting here; http://www.iwantabettermortgage.com/application.php?loan_type=HARP
