The Home Affordable Refinance Program® is still going strong, with millions of dollar still available for those that are eligible. The program was designed to help those homeowners that have made their mortgage payments on-time every month, yet are underwater due to the latest drop in housing prices. These homeowners are able to get the help that they need with HARP®, enabling them to refinance their home, taking advantage of today’s lower rates. In the end, this should help homeowners gain the equity back in their home that they once had. Because there is so much hype surrounding HARP® and a great deal of negativity, it is important to understand how to determine if you are eligible.
- Know who backs your mortgage – If Fannie Mae or Freddie Mac do not back your mortgage, you are not eligible for HARP®. It is easy to find out if either of these servicers backs your loan, as they both have a user friendly look-up tool online that enables you to find out. If your loan is not found on either website, then you probably do not have a loan backed by either company and are not eligible.
- Know the date of your loan origination – The date that your loan began plays an important role in your eligibility for HARP®. The program was designed to help those that obtained their mortgage before May 31, 2009. This means that your loan must have started on or before that date –just having the process started with the lender is not enough. The loan must actually have closed. This is easily found by looking at your closing paperwork and noting the date on the mortgage or note.
- Take a look at your mortgage history – How you have paid your mortgage over the last 6 months is important in determining your eligibility. Overall, the lender handling your loan will need to see the last 12-months of mortgage history, but the last 6 months play the most important role. Take a look at your mortgage statements to see if you paid the last 6 payments on time; this is the first step.Then you will need to go back another 6 months to ensure that you had no more than 1 30-day late in that time.
- Know the value of your home – You might not have an exact number regarding your current home value, but a ballpark figure will help you determine your current loan-to-value ratio. In general, you cannot have an LTV that is lower than 80 percent in order to qualify for HARP®. If you are worried that you are close, you can use an automated system online to see an estimated value for the time being.
- This should be your first time – If you refinanced with HARP® in the past, you will not be eligible for the program again. The program is meant for one-time use.
In addition to these guidelines, lenders can add additional requirements as they see fit. These are called overlays and are individual to each lender. If you think that you are eligible overall, shop around with various lenders to see which lender will allow you to use the program. HARP® is a great way to refinance your home, allowing you to lower your payment and pay more towards your principal, helping you to gain your equity back that was lost in the housing crisis. If you are unsure about your eligibility, any lender that offers the program will be able to guide you along to see if you qualify for the new loan.Click to See the Latest Mortgage Rates»