HARP stands for Home Affordability Refinance Program. It is basically a stimulus package brought to you by the Obama Administration. The main crux of “HARP” is to be able to help homeowners refinance their property even if there is no equity. So basically it goes like this.
I am a homeowner who has been making my house payments on time for the last twelve months. My interest rate is 7%! I want and need to refinance my home but to do so is a nightmare. Why? Well the banks do not want to refinance to someone like me who has no equity in their property. I can’t find out home much equity I have because banks will not take an appraisal from an appraiser I call. In Fact the only time I am allowed to speak to an appraiser is when the bank orders it directly and they come knocking on my door to appraise my home. This new way of doing business went into effect the beginning of 2011 with the new legislation that our wonderful Congress enacted. So even if I found a competent appraiser that indicates I may have some equity the bank will not use my appraiser only their own approved appraisers.
The second obstacle I face may be mortgage insurance. If my property has any equity but less than 20% the lenders require mortgage insurance to cover them in case I default on my loan. Granted I have been making my house payments on time for the last 13 years but because my value has gone down mortgage insurance is required. However that is only if I have some equity, if I owe more than the property is worth. Lenders will not give me a loan regardless of how high my fico score is or my income.
This is how and why HARP came to be. The premise behind HARP is that as long as I have made my house payment on time for the last twelve months and I have good credit (most lenders require 640 fico score or higher) and my loan is not more than 125% of the value they lender will refinance my home. Sounds simple enough, however the banks don’t allow anything to be too simple, maybe they like the fact that I am paying them 7% whereas if I refinanced I would be able to drop my rate to 4%.
Bottom line is the program is not a mandate from the Obama Administration. Obama allows the banks to opt in to the program. To be eligible your loan must be owned by Fannie Mae or Freddie Mac. If your loan is owned by one of these two agencies than the majority of lenders will refinance your home up to 125% of the value.
Certain restrictions apply and not every home that is owned by Fannie and Freddie show up on their websites so a call to your current lender is of course needed. If you are needing and wanting to refinance and need some assistance putting it together contact the talented team at Centurion they can be reached at http://www.CenturionMF.com or drop them a line at 562-533-5600. They can help you see if you will qualify and reduce your monthly house payment.
After all, who couldn’t use some extra cash these days?