By Daniel E. Cullick, CEO at Global American Title Agency, Inc.
Can the HARP make music for you?
Lately it seems all the financial pundits are talking about HARP. No, it is not the instrument played by angelic beings, but rather, a federal program to assist homeowners who have not been able to take advantage of historic low interest rates. HARP is an acronym for Home Affordable Refinance Program and it was enacted to aid homeowners who could not refinance because their property is worth less than what they owe. The program has been around for a little while and new changes were just made which are due to become effective in November, which will make the program accessible to even more homeowners.
What are the new rules?
Under the old program, a borrower could not qualify if he owed more than 125% of the home’s current value. This cap has been eliminated under the new rules. The deadline for a HARP refinance has been extended to December 31, 2013 and many costs have been lowered or eliminated, including the need for a new appraisal in many instances.
Is it right for me?
There are a few qualifications a borrower must meet before starting the application process:
- The mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac.
- The mortgage must have been sold to one of the agencies on or before May 31, 2009.
- The loan to value ratio must be higher than 80% (if it is under 80%, a traditional refinance should be available).
- The borrower cannot have missed a mortgage payment in the past six months and not more than one mortgage payment in the past twelve months.
- It is a one time only program, at least for now. If a borrower took advantage of it once, he cannot refinance under it again.
Where do I begin?
If the above criteria have been met, the borrower would want to find out if the loan is with Freddie Mac or Fannie Mae. This can be done by going to the website for the companies (http://www.freddiemac.com/ or http://www.fanniemae.com/) or calling the current loan provider. A call to a reputable loan officer or financial adviser would also speed the process along. A loan under this program can take a little while longer to go through the application process, but the savings in the end should make it more than worth the effort.