The Home Affordable Refinance Act (HARP) was enacted in order for homeowners to refinance to a lower interest rate, making it more affordable to stay in their home. This program has helped millions of homeowners that may have otherwise been unable to afford their loan payments. The program was specifically designed for people that owed more than 80% of their homes value. Families can refinance using this program even if they owe significantly more than their home is worth.
Some people have wanted to do a HARP refinance but have been told by their lender that they are not participating in the program. The good news is that you do not have to stay with your current lender. That is right – Any participating lender can help you! The government wants homeowners to be able to be able to stay in their home through refinancing and has made it as easy as possible for to do so.
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HARP Refinance Qualification Criteria
• Own your home. The HARP program is for refinancing only and cannot be used for a purchase loan.
• Have less than 20% equity. Unlike traditional mortgages where having more equity is a good thing, the HARP program requires you to have little or no equity in your home. It is specifically for people that are struggling to refinance because the market shifting has left them owing more than their home is worth or slightly less than.
• Fannie Mae or Freddie Mac must own your loan. Even if you bought a house or refinanced your mortgage with a big bank like Bank of America or Wells Fargo, the bank itself doesn’t necessarily own your loan. They will typically issue your loan based on the underwriting criteria that Fannie Mae or Freddie Mac has established. Once the mortgage loan has funded they will sell it to Fannie or Freddie so that they have more money to lend to the next person. The bank will continue to service your loan so from a borrowers perspective it doesn’t make a difference. In order to find out if your home loan is owned by Fannie Mae or Freddie Mac you can run a search on their website.
• You must be current on your mortgage. The HARP loan program doesn’t care how much you owe but the payments need to be made on time. If you are worried about your hours getting cut at work, or see financial challenges in your future, you should refinance first. Once you have stopped making payments on time you will no longer qualify. Refinancing ahead of time can get you through the hump by reducing your monthly expenses.
Homeowners should be aware that each bank has different underwriting criteria for their home loans. If your current lender has turned you down for a HARP mortgage loan that does not mean that you won’t qualify anywhere. You may just need a new HARP refinance lender. We are experienced and ready to help you so give us a call today.
