Do You Qualify for a HARP Loan?
It’s every homeowner's’ worst nightmare. Owing more than their house is worth, or going “underwater.” Sure, you’d love to refinance. But since you’re underwater, traditional lenders keep turning you down. Trust us. You’re not the only one.
The government even created a program to help out homeowners in that situation. It’s called the Home Affordable Refinance Program (HARP) and it might be just what you’re looking for. Not everyone qualifies, so find out a couple of things about your mortgage before you start.
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Will it improve your situation?
The first question you need to ask before you apply for a HARP loan is: “Will it improve my situation?” Will you be getting a lower interest rate? Or will this be a “more stable” loan--like a fixed-rate loan instead of an Adjustable Rate Mortgage (ARM)?
Loan to Value Ratio
The ratio of what you owe to the value of your home (your “Loan to Value” ratio) has to be 80 percent to qualify for HARP refinancing.
Freddie Mac and Fannie May
Check with your loan provider to see who made or owns your loan. If the answer’s Freddie Mac or Fannie May then you’re in good shape. You also have to have taken the loan out before 2009.
To qualify for HARP, you have to be what the government considers a “responsible homeowner”. Basically they just want to know that you’re in good standing with your monthly payments
Existing HARP Refinance
You can only use HARP once (unless the first time you used it was between March 2009 and May 2009). So if you have more than one home, use HARP on the one that has the most value to your family.
Applying for a HARP
Application through your bank
HARP is only going to be around until the end of 2015. So if you think it’s the right option for you, start the process as soon as possible. It’s going to require a lot of time and paperwork. Deep breaths. You can get help with your HARP application from the U.S. Department of Housing and Urban Development. Just call 888-995-4673.