HARP: What It Is & Why You Should Care

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What is HARP? HARP stands for the Home Affordable Refinance Program. It was established by the Federal Housing Finance Agency in 2009. Its purpose is to help homeowners that have negative equity refinance their mortgages. HARP helps homeowners who can pay their mortgages, but are unable to refinance because of plummeting prices in the United States housing market.

Need an example of how HARP might come in handy? Let’s say your home’s value has dropped dramatically, but you still have over half of your mortgage to pay off. Normally, if you wanted to remortgage— you’d also have to pay for private mortgage insurance. The cost of all this would be a huge barrier to surmount. In addition, it could be difficult to find a lender willing to help with the refinancing. Enter HARP. HARP provides you with the chance to borrow even if you have low equity. This is especially helpful when loan to value ratios are high. The best part? HARP’s guidelines are simple. Borrowers can receive a low interest rate, or a shorter-term loan. There is not even a minimum credit score.

HARP can help with all types of homeownership as it decreases homeownership costs significantly (by reducing monthly payments and incorporating a fixed rate mortgage). There are no appraisals, no limits on how far a home has fallen in value, and there is not much paperwork. That said, in order to take advantage of HARP, borrowers need to have made current payments towards their mortgage (and have no late payments). Their home must be their main residence, either Fannie Mae or Freddie Mac must own the mortgage, and the loan to ratio value must be higher than 80%.

HARP ends in December 2016—so the Federal Housing Agency is making a final attempt to reach borrowers before the program closes. The FHA estimates that HARP can help borrowers save thousands of dollars a year on mortgage payments. The best thing homeowners can do now is contact their banks, gather financial information, and pull together their income details.

If you’re wondering how you can take advantage of HARP, contact BrightPath Mortgage. BrightPath Mortgage provides borrowers with specialist knowledge that saves homeowners money and keeps homes secure.

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