Making Homes Affordable In Us With Harp Refinance

By Author: John Krawczyk
Total Articles: 28
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Home Affordable Refinance Program or HARP Refinance program is set up in United States by the Federal Housing Finance Agency. The program is meant to help home owners whose asset value under mortgage has decreased below the loan amount to refinance their mortgage. This started after the US housing market correction after which house prices have dropped considerably. The problems started in 2006 when home values went down suddenly. Many home owners who had taken loans found that the outstanding loan value was above the current value for their home. They could no more avail the low interest home loans since upon refinance they were not eligible even for the amount then availed by them. In that case, you might have to pay for Private Mortgage Insurance or PMI which would nullify the advantage of low interest mortgage.

When HARP refinance was introduced people could avail the low interest mortgages if their loan amounted to 125% of the mortgaged property value. In December 2011, the Federal Housing Refinance Agency removed the percentage limit and now everyone can enjoy the benefit of HARP refinance irrespective of their ...
... home value percentage to loan balance for up to 30 years.

To avail HARP government lays down certain basic requirements like:

 The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae. Though many people are not aware, most of the mortgages are indirectly linked to Freddie Mac or Fannie Mae

 Freddie Mac or Fannie Mae should have acquired the mortgage before 31-May-2009

 The home owner cannot have more than one HARP refinance aid unless the other one is also under Fannie Mae and refinanced through HARP during March – May 2009

 The home owner should be the existing loan payer with no late payment within the last 6 months and maximum of 1 late payment within last 12 months

 Current LTV (Loan-To-Value) ratio must be more than 80%

 Home owner should benefit either from a lower monthly payment or switch from adjustable-rate mortgage to fixed-rate mortgage

HARP 2.0 extends the benefits to mortgages with PMI also but with some difficulty. HARP Refinance requires the home owner to extend the mortgage insurance to cover the original mortgage value. This can be time consuming and sometimes very difficult to get. Since HARP 2.0 lets any lender to refinance the mortgage, the home owner can approach other lenders if the original bank is not filling to refinance. HARP Refinance is given to primary homes occupied by the owners, secondary home and investment property also which the owner has given for rent. Investment properties have higher mortgage rates than owner occupied property. Appraisal waiver option is also available in places where an automated valuation model is available depending on the mortgage servicer.

Another version of HARP Refinance, HARP 3.0 which plans to extend the benefits of HARP to non-Fannie Mae and non-Freddie Mac mortgages. The new version has not yet been passed by the federal government. HARP is known by many names throughout the US. Many US citizens benefit from this citizen-friendly federal program that eases their mortgage burden to a great extent. HARP refinance is scheduled to end on 31-Dec-2013.

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