Could You Qualify for a HARP Loan Modification?

May 7th 2016

Homeownership can be an exciting adventure, providing peace of mind for the well-being of individuals and families. However, when people have been declined for traditional refinancing because of declining home values, the process becomes challenging. The Home Affordable Refinance Program is designed to change those challenges into achievable realities.

What Is HARP?

HARP began in 2009. It was spearheaded by the Federal Housing Finance Agency to provide assistance to homeowners who owe more on their mortgages than the homes are worth. The program was targeted to help borrowers with loans owned by Freddie Mac or Fannie Mae and those who remain current with mortgage payments

With HARP, you can change from adjustable to fixed-rate mortgages, obtain lower interest rates or acquire shorter loan terms when refinancing a home. HARP does not require a minimum credit score.

Benefits of HARP

HARP offers financial benefits that can help you maintain mortgages in jeopardy of foreclosure or default. For example, you can build equity faster with shorter loan term options and secure fixed-rate mortgage rates that do not increase throughout the years. In addition, HARP can lower interest rates, which ultimately may lower your monthly mortgage payments. You may also have lower closing costs when refinancing through HARP; some risk-based fees are usually modified or reduced.

Another attractive aspect of refinancing through HARP is that qualified borrowers can finance regardless of the amount the value of the home has fallen, whereas previous loan-to-value limits maxed at 125 percent. The loan process may also move along quickly without the need for underwriting or appraisals in some cases. Lenders working with HARP-qualified borrowers typically have to complete less paperwork for income verification, which makes for a quick and smooth transaction.

HARP Eligibility

To qualify for HARP, you must have a current mortgage owned by Freddie Mac or Fannie Mae. The home must be a primary residence, a one- to four-unit investment property, or a one-unit second home. You must not possess any 30-day late payments within the past six months and no more than one late payment within the past 12 months. Your mortgage payments must be current when you apply for HARP.

You can refinance through HARP if your loan originated on or before May 31, 2009. The current loan-to-value ratio must exceed 80 percent.

HARP Application Process

Begin the process of refinancing through HARP by verifying that your current mortgage is financed or owned by Freddie Mac or Fannie Mae. The HARP.gov website features a loan look-up tool to verify lenders.

Before venturing into the process of refinancing, gather all financial documents you need to refinance, such as mortgage statements, income tax returns and verification of employment. Contact the current mortgage company if it is approved as a HARP lender to begin the paperwork process. You can also contact any HARP lender. A complete list of HARP lenders is available at HARP.gov.

Once the lender approves you as qualified for HARP, the lender guides you through the application process, which may involve providing gathered financial materials. Once approved, the lender schedules a closing so you can sign and agree to the new terms of financing.

With the assistance of HARP, many homeowners have been able to secure financial freedom with more affordable payment options. Instead of loan application rejections, HARP can turn the ""no"" to ""yes"" for qualified borrowers.

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