For much of the past year, mortgage rates have been at or near description low points. Unfortunately, many homeowners have been unable to take benefit of these rates due to declining home equity. Many homes have lost essential amounts of value since the housing store peaked in 2006. As a result, many homeowners now owe more on their mortgage than their home is worth (this health is known as being "underwater" or "upside-down" on one's mortgage). Homeowners who lack equity in their homes are oftentimes unable to meet the loan-to-value (Ltv) ratios required by lenders in order to refinance their mortgages. These borrowers may be missing out on thousands of dollars worth of savings.
In response to this situation, the government created the Home Affordable Refinance agenda (Harp). Harp was designed to allow homeowners with miniature to no home equity to refinance into lower mortgage rates. Harp loans are ready to borrowers with Ltvs of as much as 125 percent, although the maximum Ltv it varies by lender.
Some of the eligibility requirements for Harp are:
• The borrower's mortgage must be owned by Fannie Mae or Freddie Mac
• The home must be the borrower's former residence
• The borrower must be current on their mortgage with no late payments in the last 12 month period
• The new loan must lower the borrower's monthly payments
For a complete listing of the Harp eligibility requirements, check out the production Home Affordable Webpage here.
The Harp loan agenda has been extended straight through June 11, 2011.
Harp Loans May Allow Underwater Homeowners To Refinance Into Lower Mortgage Rates