First of all, what is the HARP program? HARP stands for Home Affordable Refinance Program. It was originally intended for homeowners to get lower and steadier mortgage rates in case the value of their home declined. Remember that pesky 2008 market crash and the whole Wall Street bailout? That was a part of the reason. If you don’t remember it you can always take a look at the movie Wall Street: Money Never Sleeps starring Shia LaBeouf. All jokes aside, here are some tips to help you decide on the home affordable strategy.
The HARP Program Has a Unique Set of Requirements
If you are more akin to FHA or conventional refinance methods you may feel like you’re a fish fresh out of water but it’s actually less complicated than it appears. One of the criteria to qualify is that your mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009. It’s imperative to not have refinanced under the home affordable refinance method previously unless it’s a Fannie Mae loan refinanced in the time period of March-May, 2009. What you may find convenient is the loan to value ratio is much higher than typical financing methods. Most lenders do not accept your request if your loan to value ratio is over 20%. However, the HARP program actually accepts you when your value is over 80%! Like other refinance options it does require you to have quality mortgage record over a 12 month period. Sorry, it’s not that easy.
How to Find Out if You Meet Fannie Mae or Freddie Mac Requirements
One of the best ways to see if you are eligible for these programs is simply by going online. There, you can find an abundance of information regarding these programs. You can peruse through either the Fannie Mae or Freddie Mac website and even fill out the application right there. The forms on those sites are pretty self-explanatory. If you still have trouble just find a lender who can help you out in the application process. A lender will be able to tell you early on if you meet some basic requirements which can make progressing in these preliminary steps a lot easier. Also, you may save time by going with a different method. If you are the type of person that likes to engage right on the page there are usually online representatives that can navigate you through the site.
Be Realistic in Your Financial Decisions
If you find yourself in quick sand during a market decline don’t hustle too fast– you’ll end up sinking. Slowly but surely take the proper steps to get out of the sand. Remember, lenders look at your financial responsibility. When you show lenders you are responsible with decisions and payments, they are more willing to bend the rules a bit. A less chance of default means saving both of your hides and a default can honestly hinder your progress when you begin making future financial decisions. Take an honest look, if you cannot fulfill the requirements of the HARP program there are other options to view.
Use FHA Financing as a Backup Option
There are a lot of advantages to use federal refinancing as a good source of back up. If you decide to do a federal streamline option refinancing can make things go by a lot quicker. You won’t have to go through so much paperwork and you’ll even be able to reduce your mortgage rates for a certain period of time. You may tack on a bit of interest but you can use that time to build more stability in your income. Additionally, you may use the equity to actually bring up the value of your own home. This is a good plan to help you increase your property’s worth even after a major crash. If you don’t mind a bit more paperwork and responsibility the federal cash out plan is another good situation to consider. Make sure that your house is up to date as far as major appliances because a lender will require a brief inspection to see if it’s up to standard by the federal government. If not you may have to pay a fee to get necessary repairs before you can do a cash out method. However, this will be another way to increase the market value of the home, use the equity for cash, or invest in an additional property. Remember, the HARP program is a solid choice under Freddie Mac and Fannie Mae loans. But if you don’t fancy it then financing through a conventional or federal government loan is a great alternative.