With changes in the economy and frequently fluctuating mortgage rates, many homeowners decide to refinance their mortgages to get better rates and save money as they pay off their homes. Unfortunately, the housing market is not what it once was, and the declining value of a home may prevent a homeowner from being able to refinance a mortgage. If the value of a home has declined, homeowners may not be able to secure traditional refinancing. In this situation, a Home Affordable Refinance Mortgage may be an option for those wishing to secure refinancing.
The Home Affordable Refinance Program, commonly called “HARP,” was created in March 2009 by the Federal Housing Finance Agency for homeowners who are able to keep up mortgage payments, but unable to refinance due to declining home values.
Recently, changes and improvements have occurred to allow more homeowners to take advantage of the program and save money on their mortgages. “HARP 2.0″ allows homeowners with private mortgage insurance with a lender other than their own since many lenders will not refinance mortgages with private mortgage insurance attached. In addition, those applying to the Home Affordable Refinance Program may forego a home appraisal if a reliable automated valuation model is locally available. However, this is left to the discretion of the mortgage company.
There are specific requirements to be eligible for a Home Affordable Refinance mortgage. First, the mortgage must be held by either Fannie Mae or Freddie Mac, and must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009. The given homeowner may not have refinanced with HARP previously. However, this does not apply to Fannie Mae loans refinanced under HARP between March and May in 2009. The loan-to-value ratio also must be more than 80%. Finally, the mortgage payments must be current at the time of refinancing, with a good payment history for at least a year prior to refinancing. This program is not in place for homeowners at risk of foreclosure.
Not all mortgage services offer refinancing under this program. After determining eligibility, homeowners have to find a mortgage service that can refinance under HARP 2.0 and has been approved by Fannie Mae or Freddie Mac. As with any refinancing, compare the options offered to ensure your refinance has the best terms possible for you. Do not assume that the first offer is the right one. The Home Affordable Refinance Program is scheduled to end on December 31, 2013.
Refinancing a mortgage is common among homeowners in order to secure better interest rates and save money. If homeowners have been keeping up with their mortgage but the value of their home has decreased, HARP 2.0 can function as an alternative to traditional refinancing options.
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