Harp Refinance- An Overview

As per the standard definition, the Home Affordable Refinance is a federal program of the US

, which is chalked out by the Federal Housing Finance Agency in the year 2009. It was meant to support the underwater homeowners to refinance their mortgages. It is commonly known as HARP Refinance. So, unlike the HAMP (Home Affordable Modification) program that helps to homeowners who are at risk of foreclosure, HARP too targets the homeowners who are there over their monthly mortgage payments but are unable to refinance owing to dropping home prices in accordance to the US housing market correction. Later in the very same year, this program was seen with an extension of including people having an LTV up to around 125 percent, whereas again in December 2011, there were some amendments in the rules. This included leaving no limit on the negative equity for the mortgages up to 30 years. This means that even those having more than 125 percent of their home property value could get the refinance without having the PMI (private mortgage insurance).

This program was simply created to refinance the homeowners who are creditworthy having minimal amount of equity to find mortgage on the regular fashion. Unlike the HAMP program, you are not supposed to showcase any financial hardship or remain at risk for the forthcoming default. In fact, you are supposed to have sufficient amount of income to qualify from a mortgage at the current interest rate of the market. The following are the eligibility to get refinance with this program. You should:

Be the owner of 1 4 -unit home

Have some home loan guaranteed or owned by Freddie Mac or Fannie Mae

Must have paid the mortgage on the prescribed time (as you do not get any payment after 30 days of due date) for minimum the last 12 months, and,

Do not owe not more than 125 percent of your property value on the first mortgage (having a combined loan to value ration over 125 percent is allowed provided if the holder of the second lien is keen to slash down to the new first mortgage)

When you have to shop for the FHA Refinance , you are supposed to provide everyone with the same information including your loan balance, property value, and a rough calculation of your credit score. If you are interested in using a new lender, you need to file the application underwritten electronically before the appraisal is ordered. You need to ensure that you find your approval via the automated underwriting service, and, if applicable also the mortgage insurer before you put any money for the appraisal procedure. If your application is rejected electronically, you need to apply by underwriting manually, with such cases, only your current lender would refinance you with your desired HARP loan.

The other problem you could face is related to MI (mortgage insurance). By having any current MI policy, you simply have to keep it provided you get the refinance from the very same lender. By having a new lender, you need a new policy, and in case if you see your credit rating going down, then finding any new MI cover could be a daunting experience for you.

by: firstchoicemoney

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