What is The Home Affordable Refinance Program?

Posted on Oct 4, 2012 in HARP Refinance

Question by Dorinda: What is The Home Affordable Refinance Program?
HARP stands for Home Affordable Refinance Program

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Answer by rtfm

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  1. As part of the federally-sponsored Making Home Affordable Program, the Home Affordable Refinance Program (HARP) is designed to help homeowners who may not qualify for a refinance because of negative equity in their homes obtain more favorable mortgage terms. If you’re having difficulty refinancing your home, learn what steps to take to determine if the Home Affordable Refinance Program can help you.

    1. Determine your eligibility. To pre-qualify for the Home Affordable Refinance Program, your loan must be backed by Fannie Mae or Freddie Mac, you must not be more than 30 days late on your mortgage payments, the amount owed to your first mortgage is not more than 125 percent of the property’s value, you have income or means to pay, and refinancing will make the loan more affordable in the long term. You may contact Fannie Mae or Freddie Mac to determine if they have guaranteed your loan. Your lender will be able to give you a good faith estimate of your home’s current value.

    2. Contact your lender and ask for a Home Affordable Refinance Application. You may also apply for a HARP refinance through an outside lender who is approved to do business with either Fannie Mae or Freddie Mac.

    3. Fill out the application and return it to the lender. Along with the application, you will need to include statements of your gross monthly income, recent tax returns, information about your second mortgage if you have one, and a list of all other monthly debt payments you currently have. Your lender will determine the value of your home as part of the application process.

    4. Stay in touch with your lender and be patient. It will likely take your lender 30 days or longer to look over your application and determine if you qualify for a Home Affordable Refinance. Provide any supporting documentation that they may request. Continue making your mortgage payments on time and in full each month.

    5. If your refinance is approved, you will need to sign the new loan documents and pay any applicable fees and/or closing costs, unless you are rolling them into the loan. Get a copy of the new payment schedule and begin making your new monthly payments

  2. The Harp Program is a program especially developped for home owners whose houses have lost value in the last few years and didn’t manage to get a refinance mortgage. Under other circumstances, refinance banks will demand that the equity or value of your property is higher than the mortgage balance before they want to approve any application for a mortgage refinance. But if your house value had gone down during the financial crisis, that is not possible. Thus, the Home affordable Refinance Program (Harp) was designed for home owners facing this quandary.