Understanding The Intricacies Of The HARP Loan

HARP is short form for “Home Affordable Refinance Program” and was first designed for those people who owned homes that were serviced by loans from Fannie Mae and Freddie Mac. With this program homeowners were then able to refinance their homes that where slightly underwater that previously didn’t have Mortgage Insurance. This could also be done with loans that were struggling or which had an outstanding balance that was much higher than the value of the house. When HARP first came about, it did not do well in some areas because incomes were being closely watched and loans were capped at a 125% value. This basically meant that you could not own more than 125% the value of the home.

At present, HARP 2.0 is being worked on and will be called HARP 2012 once it is released. It will be an improvement on the first HARP program and will give borrowers the flexibility to refinance at lower interest rates with minimal income documentation. There will also be zero limits for value which means that appraisals will totally be eliminated from the scene. Put simply if you are home owner with Fannie Mae or Freddie Mac owned home and if you have not defaulted on your loan repayment for 6 months with the ideal being 1 delay in payment in a year, you will then be able to refinance to a level below the 4% range on a 30 year fixed. This can mean that you could do this with no appraisal and minimal documentation.

To find out if you fall in the Fannie Mae or Freddie Mac category, you can do so by going online and checking whom your loan belongs to. You will instantly know the answer online and if you don’t, you can easily ask your loan provider for the information. The loan you get will be able to refinance your first mortgage alone without touching the 2nd one if you have it at all. Besides taking on loans that are slightly underwater, you can take advantage of this program if you have a higher interest rate than what is currently in the market. You can also make use of HARP if you have an ARM or an adjustable rate mortgage that stands to be reset soon enough. You can make use of this if your loan to value is over 80% and needs mortgage insurance.

The main aim of HARP is to bring down the amount you are paying right now and a maximum of $ 250 Cash is allowed back at closing.