UNDERSTANDING THE HARP PROGRAM

What is the HARP program? If you are current on your mortgage payment but upside down on your home, you should at least read my blog. 

HARP is short for Home Affordable Refinance Program and it is federal government program that aims to help responsible underwater home owners to refinance their current mortgage, even if the current market value of your home is lower than what you owe on the mortgage loan.   How does this help you?

1. If you have a high risk loan, such as a 5 Year Adjustable or Interest Only loan, HARP will allow you to convert your mortgage to a fixed-rate mortgage.
2. Themortgage payment is reduced to a much lower interest rate; thereby, lowering your payments AND the total you will pay while you have the loan.

For example, if your current mortgage payment is based on 5.5% but you could lower the interest rate to 4% your payment would change by about 263.00.  See the illustration below – this is only an estimate and your lender will be able to calculate your savings based on your credit worthiness, income, assets, and liabilities

HARP Program Requirements

• Your home mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac;
• you must be current on your mortgage, and cannot have made a payment more than 30 days late in the past year;
• You must have negative home equity (you owe more on your mortgage than your home is worth) and do not have a limit to how much you are underwater
• Refinancing must help the affordability or stability of your mortgage;
• You must have the ability to continue making payments;
• Mortgages owned or guaranteed by the FHA, VA, or USDA are not eligible for HARP.
• Your property must be 1-4 units;
• Your property can be a primary residence, second home or investment property.Your property can be a primary residence, second home or investment property

Why is the government doing this? HARP prevents further housing meltdown while rewarding responsible home owners who are upside down in the homes and who have low “teaser” rates.  This program stabilizes mortgages by converting high risk homeowners into more stable situations.  This benefits entire communities.  Most participant lenders do not charge origination fees. For more information visit:

https://www.fanniemae.com/content/faq/harp-du-refi-plus-faqs.pdf

Disclaimer: The interest on the portion of the credit extension that is greater than the fair market value of the dwelling is not tax deductible for Federal income tax purposes: and the consumer should consult a tax adviser for further information regarding the deductibility of interest and charges.