What Does it Mean to be Upside-Down in Your Mortgage and How Can HARP Help?
As a result of the recent housing crisis which started in 2007 and 2008, many homeowners have found themselves “upside-down” in their mortgages. This simply means that they now owe more on the loan than the house is worth. If you are in this circumstance, there is hope.
HARP and How It Helps
The Obama Administration implemented the Home Affordable Refinance Program (HARP). This program was created specifically to help homeowners who found themselves upside-down in their mortgages as a result of the real estate collapse. Through this program, homeowners can refinance where a traditional refinance would not work. You can qualify for this program as long as you have a Loan-To-Value (LTV) ratio of at least 80%, though it is made for people who owe more than the home is worth. Initially, the program had a 125% LTV cap, but in 2009 that cap was removed, allowing millions of homeowners to qualify for HARP.
Under HARP, you can have the principal on your loan lowered to your home’s current value and you can lock in a more advantageous interest rate. Before this program existed, there were simply no options for people in an upside-down mortgage.
HARP eliminates the need for a complicated application process, gets rid of costly appraisals, and has very forgiving qualifying requirements, so eligibility for the program is far easier than it is for a traditional refinance.
HARP Eligibility Requirements
- All HARP loans must be owned by either Freddie Mac or Fannie Mae.
- You must not have had a late payment within the last six months and no more than one late payment in the past year.
- Freddie Mac or Fannie Mae must have purchased your loan prior to May 31, 2009.
- You must have little to no equity in the property. The absolute lowest limit to this is an 80% LTV ratio.
- You cannot have refinanced with HARP previously unless the refinance took place between March and May in 2009.
Since HARP has been so successful in helping stabilize the market and helping millions of homeowners across the country, there is a proposal to continue the program and even increase the possible benefits it offers to homeowners.
If you have found yourself upside-down in your mortgage, it is time to talk to a certified lender about your options under the HARP program. You can find the best lender for your situation by talking to one of our Mortgage Advisors. With the right lender, you can begin to rebuild equity, lower your monthly payment, and save on taxes and insurance. Take your first steps today!
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