HARP Loan Program And HARP Eligibility
5 Key Requirements For HARP Eligibility
If you satisfy HARP eligibility criteria you may be able to re-finance you home at a lower interest rate. HARP stands for Home Affordable Refinance Program. It is a federally sponsored home refinance program targeting home owners that are “underwater”.
Meeting HARP eligibility means you’ll be able to refinance your home mortgage if you have limited or even negative equity in your home.
The HARP program along with the HARP eligibility requirements were originally launched in early 2009. It was aimed to help homeowners that are making their mortgage payments, but can’t refinance with conventional loans due to low or negative home equity.
The current deadline to refinance under HARP is Dec. 31, 2015. To see what a lower mortgage interest rate can do for you, use our mortgage loan calculator on the side bar this website.
Do You Qualify for the HARP Loan Program?
HARP eligibility isn’t a lot different then any other mortgage loan program. Since HARP mortgages are backed by Fannie Mae and Freddie Mac, the underwriting process is basically the same as any other conventional mortgage. The most important piece for HARP eligibility that is different from other conventional loans is that there isn’t an appraisal. That means home equity, while it will be estimated, isn’t considered for HARP eligibility. Mortgage lenders are looking for borrowers with “good” incomes, adequate assets and high credit scores.
The list of HARP eligibility documentation requirements includes:
- The mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac
- The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009
- Borrowers must be current on their mortgage payments with no payments more than 30 days late in the last six months and no more than one late payment in the last 12 months
- Eligible property types are primary residence, one-unit second home and one-to-four-unit rental property
- The current loan-to-value (LTV) ratio must be at least 80 percent. There is no maximum LTV limit for a new fixed-rate mortgage. The maximum LTV for a new adjustable-rate mortgage is 105 percent.
- You cannot have previously refinanced under HARP (unless it was a Fannie Mae loan refinanced under HARP between March and May 2009)
5 Key Things For HARP Eligibility
If you believe the HARP loan program may be what you need, here are five items to review for a HARP refinance:
1. Ensure Fannie or Freddie backs your mortgage
Fannie Mae and Freddie Mac each have a loan look up tool which allows homeowners to search for their loan:
To check if your mortgage is backed by Fannie Mae, visit https://knowyouroptions.com/loanlookup. If your mortgage is not found, try Freddie Mac’s loan lookup at https://ww3.freddiemac.com/loanlookup/.
Mortgages not listed on either website are not backed by Fannie Mae or Freddie Mac and, therefore, are not HARP-eligible.
2. Determine if your mortgage is old enough
Only those whose mortgages were securitized prior to June 1, 2009 can apply for HARP. This means your current mortgage must have started in mid-May 2009 or earlier. You can find your mortgage start date by looking at your closing paperwork.
Note: Since it can take up to 60 days to securitize a Fannie Mae or Freddie Mac loan, even if your start date is close to June 1, 2009, you still might not meet HARP eligiblity.
3. Does your mortgage have mortgage insurance?
HARP is designed to help homeowners with or without private mortgage insurance (PMI) and lender-paid mortgage insurance (LPMI). The general rule of thumb is that if you have mortgage insurance, your new HARP mortgage must have the same level of coverage.
Some borrowers have been denied a HARP refinance because of LPMI. If your currently lender won’t refinance because of LPMI, shop around for one that will.
4. You must be current on your present mortgage payments
HARP requires that all homeowners have made their last six mortgage payments on time, with a maximum of one 30-day late payment in the past year. This information is verified against your credit report, so be sure to review your credit reports prior to submitting your HARP application.
5. Organize your HARP paperwork
Since HARP mortgages are underwritten like every other type of mortgage, you will be required to provide bank statements, a driver’s license, homeowners insurance information, pay stubs and W-2s. If you’re self-employed, you’ll have to provide a few years of tax returns to verify your income.
The speed in which you return these items to your lender can dictate your mortgage rate. If you’re going to apply, you must follow these tips to be approved and to close as quickly as possible.
While the HARP program has made changes over the years that allow more borrowers to qualify, a few reasons why you wouldn’t meet HARP eligibility, include:
Bad credit. Some borrowers can’t qualify due to impaired credit or too many late payments on their existing mortgage.
Equity issues. HARP has no maximum LTV ratio for borrowers who obtain a new fixed-rate mortgage, a maximum LTV ratio of 105 percent for borrowers who get a new adjustable-rate mortgage, and a minimum LTV ratio of 80 percent for all loan types.
However, lenders typically impose their own guidelines, called “overlays,” which may include different LTV rules.
One time ONLY. Homeowners can only utilize the HARP program once. So, if you are trying for a second time around with HARP it won’t work.
Fannie and Freddie must own or guarantee your current loan. You will not qualify for HARP if your mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac.
We have additional information on mortgage lenders and some of the key things you should know about them – HERE.
If you think you would have HARP eligibility, but know a lender, perhaps we can help. We would be glad to provide the names of lenders many of our clients have used.
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