Don’t Harp on HARP
You can complain until you are blue in the face about how the federal government handles the country…believe me, I have…but the Home Affordable Refinance Program (HARP) is something lawmakers actually got right.
It’s no secret that the housing industry, and economy in general, have taken a huge hit in the past several years. Homeowners are over extended on loans and watching as their homes devalue year by year. It can be difficult to find refinancing options because you may owe more than what your home is worth.
HARP gives people the opportunity to refinance their homes and get lower interest loans. There is always a catch though, it wouldn’t be the government if there wasn’t. You have to qualify for the program and there several stipulations, mostly involving Freddie Mac or Fannie Mae.
The home mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae, have been sold to those companies on or before May 31, 2009 and cannot have already been refinanced by HARP unless it was between March and May of 2009
Confused yet? Of course you are. It’s a government program. But wait, there’s more…
You must also be current on the mortgage and have a good payment history for the past year. Your loan-to-value ratio must be greater than 80 percent. The higher the LTV ratio, the more risk you are to lenders, but the government is throwing you a bone with HARP.
The program lets you refinance you home for a lower interest rate when no one else will touch it with a 10-foot pole. Homes with high LTV are a lot like a lending leper colony, but HARP gives you the chance to take back your mortgage and leave the colony forever.
Since this is a new loan, you’ll have to go through the entire process, including a new application and underwriting, but the savings provided by this program far outweighs the time investment. Our lawmakers may not be able to tie their shoes without falling flat on their faces right now, but they hit the mark with HARP.
In Closing -
If you’re struggling with your mortgage and your home has lost value because of the market, HARP is a life preserver thrown out by the government to help people save themselves from a sinking residential ship. If your mortgage is owned or guaranteed by Fannie or Freddie, then find out more; you may be able to get your interest rate lowered and help alleviate a hardship during these tough economic times.
Scott Stevenson
