The HARP mortgage program is a simple solution to negative equity for home owners. Negative equity is where the value of a home has decreased to the point that it is no longer worth the amount which was borrowed. This loan-to-value (LTV) ratio could be dramatic: a drop of $100,000 or more.
If a householder is facing this situation and could soon fall behind on mortgage payments without help, there is a government plan in place to keep him above water. This is the HARP mortgage, a refinancing scheme which brings payments under control. Consumers who qualify for this program enjoy lower fixed interest rates, usually without a home appraisal.
How does a person qualify for a HARP mortgage? Here are some points to keep in mind:
- The mortgage must have been taken out before May 31st 2009
- It must be owned by Fannie Mae or Freddie Mac
- The client must not have had previous HARP refinancing
- Payments must be up to date
- The client must be employed
Your property could be a condominium or a residential house. It might be your holiday home, or perhaps it is a rental investment. It is fine to hold a second mortgage, but only the first mortgage qualifies for refinancing.
A HARP mortgage program is a safe, secure government program put in place in answer to the economic crisis of the past decade. Although many lenders expect clients to have a minimum credit rating to be willing to sign them on to the HARP program, the rate might not be as high as it would be if you signed for a new mortgage. Your current debt does not affect eligibility.
How do you find out if your current lender will sign you up for HARP refinancing? You can ask them, and if they will not do this they might say you are unable to switch lenders. This is not true. Most banks and lenders do not really own your mortgage anyway. They simply facilitate your payments and take a fee. You can definitely switch to another lender who is affiliated with the federal scheme which will be running at least until the end of 2013. The HARP site and other financial institutions are just two places to find a list of participating lenders. Be careful of scams, though. Be cautious of any company that seems unfamiliar.
Your new HARP mortgage could be stretched out for 15, 20, or 30 years. Pay off the loan faster at a lower interest rate or take time over payments to give yourself breathing room.