There exists an opportunity for homeowners looking to refinance, but are burdened by lower equity (less than 20%) and want to pay a little less on their monthly mortgage payments. It began in 2009 when the Federal government introduced “HARP” loans.
The premise was simple: help homeowners unable to secure a traditional refinance option save money on their mortgage payments. The hope is that you’ll have more money to meet other financial goals. Here are some other benefits of HARP.
- Keep an eye on your loan-to-value ratio. HARP eligibility states you must have greater than or equal to 80% ratio on your LTV. In addition, you must have limited or no delinquencies a full 12 months prior to your HARP application.
- If your home has drastically fallen in value – gone “underwater” – you can still apply for a HARP loan if you meet the other qualifications. The original limit on underwater loans was set at 125%, but has since been lifted to allow homeowners whose homes have drastically depreciated.
- HARP can help you put equity into your home relatively faster.
- In addition to refinancing, you can get a shorter loan term or a lower interest rate without a minimum credit score requirement.
- Certain applicants looking to shorten their mortgage term may have risk fees eliminated through a HARP application.
The program’s deadline has extended to December of 2016. But take note: only loans originating before May 31, 2009 and facilitated through Fannie Mae or Freddie Mac are eligible for HARP.
Since it’s original inception, the government opened HARP 2.0. This ‘second HARP’ program is simply the basic HARP with added qualifying factors. For instance, if you have Private Mortgage Insurance (PMI), you are now eligible to apply for the HARP program. If there were issues with fraud on your original loan, 2.0 does not hold your new lender responsible for those actions. This allows more lenders the opportunity to handle a HARP application without accountability to the original loan processor.
Does NASB Handle HARP Applications?
At NASB, we’re proud to be a HARP lender as well as our ability to assist you with your unique home mortgage needs.