Many people across the US are aware of the HARP refinance program or have already taken advantage of it to get a lower monthly mortgage payment and interest rate. If you have heard of it, but haven’t yet taken advantage of it yet, perhaps it is due to one of a handful of common myths that people seem to be believing. Some of these myths about HARP have become common enough that recently an SVP at Freddie Mac named Tracey Mooney released answers to these common myths. From Freddie Mac’s Blog:
Myth No. 1: I’ve had my loan for many years, and with HARP I’d have to start all over again with a 30-year mortgage.
Fact: You can refinance into fixed-rate mortgages with terms anywhere from 10 years to 30 years. Check with your lender to see if it offers shorter terms.
Myth No. 2: I’m receiving too many solicitations to help me refinance. They must be scams.
Fact: Many homeowners are wary of the numerous solicitations they receive to refinance their mortgages. Legitimate offers often have specific information identifying your current mortgage, including your loan number. If you are unsure whether an offer is legitimate, call your lender before responding to third-party companies that advertise themselves as “mortgage experts.” If you do suspect that an offer is a scam, report it immediately by calling 888-995-HOPE.
Myth No. 3: I am really underwater on my mortgage. HARP can’t be for homeowners like me.
Fact: HARP has been enhanced several times since the program was first introduced in 2009. Now, HARP doesn’t have any loan-to-value restrictions for fixed-rate mortgages, so even if you owe much more on your home than it is worth, you may be eligible.
Myth No. 4: I recently lost my job, so no one is going to help me refinance through HARP.
Fact: If you are pursuing HARP through your existing lender, at a minimum you will need to show a source of income for at least one borrower on the loan. Alternatively, if you have available funds equal to at least 12 months of principal, interest, taxes, and insurance, then you may be eligible. If you are looking to refinance through HARP with a new lender, the income documentation and qualifications have been simplified. In either case, reach out to your lender to discuss your options.
Myth No. 5: My lender doesn’t offer HARP, so I can’t refinance through the program.
Fact: If your existing lender doesn’t offer HARP, you can contact other lenders for help. Review Freddie Mac’s and Fannie Mae ’s lists of participating HARP lenders to find a lender who can discuss your options and eligibility with you.
Myth No. 6: I have an adjustable-rate mortgage (ARM), so I am not eligible.
Fact: HARP was created to help homeowners like you transition into mortgages with more stable and sustainable terms. With rates still at historic lows, consider refinancing into a fixed-rate mortgage where you’ll have the security of knowing what your payment will be for the entire term of the loan.
Myth No. 7: I can’t refinance because my property is a condo.
Fact: HARP allows you to refinance even if your property is a condo. In fact, HARP also allows you to refinance investment properties or second homes.
Myth No. 8: I don’t have enough cash to pay closing costs, so I can’t refinance through HARP.
Fact: Not all homeowners will have to pay out-of-pocket closing costs with a HARP refinance. Talk with your lender about rolling your closing costs — and any other monies due at closing — into your new mortgage.
Myth No. 9: HARP is only for homeowners who are behind on their payments and in danger of foreclosure.
Fact: HARP is intended specifically for homeowners who are current on their mortgages but are underwater and unable to refinance through a traditional refinance.
While HARP 3.0 has not been officially announced yet – many people who may be eligible still have not seen if they can take advantage of HARP 2.0. If your loan is owned by Fannie Mae or Freddie Mac, chances are that you could refinance through the HARP program and see a reduction in your interest rate and monthly payment.
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