There's been a lot of talk about the Government’s Home Affordable Refinance Program (HARP). What is a HARP refinance, and how does help homeowners?
The HARP Federal program was created by the Federal Housing Finance Agency on March 2009 to help homeowners refinance their mortgages after the mortgage crisis in 2008. It was particularly aimed at helping homeowners who were "underwater" in their mortgages (owed more on their mortgage than their home was worth). However, anyone who meets the HARP qualifications can apply for a HARP refinance.
Great! But what benefits does a HARP refinance provide? Well, five great benefits to be exact:
Benefit #1 - No Need for Mortgage Insurance
Homeowners are discovering that conventional refinancing (non-HARP) requires them to pay costly mortgage insurance. This type of insurance is created to protect lenders in the instance a homeowner defaults on their mortgage.
With the Government’s HARP refinance mortgage plan, you won't need to have mortgage insurance, saving an additional monthly expense that would be added in to your monthly mortgage payment.
Benefit #2 - Flexible Funding Requirements
In an effort to make the HARP refinance plan accessible to more people, the Government changed the underwriting guidelines and made the rules significantly more lenient than those found in a conventional refinance.
Basically, homeowners who have less than stellar credit can apply for a refinance loan using HARP. In addition, the loan-to-value requirements for a HARP loan are considerably higher than with a conventional loan.
For example, someone with FAIR credit wanting to refinance a $200,000 home can do so much more easily using HARP even if their home value is less than $200,000. This is something that just can't be done without HARP.
Benefit #3 - Cheaper Closing Costs with a HARP Refinance
The closing costs for HARP refinance loans are capped.
This means the expense or outlay of capital required to refinance using HARP is considerably lower than with a conventional refinance. Fewer closing costs, means more money in your pocket.
Benefit #4 - No Appraisal Needed
With a HARP refinance there is no need for an appraisal.
This can save the homeowner both time and money as they won't need to pay out-of-pocket for a home appraisal, and can close more quickly. With mortgage rates on the rise, locking in a low rate and closing quickly are becoming increasingly important.
Benefit #5 - Better Mortgage Rates & Terms
Lastly, and most importantly, HARP mortgage rates are some of the most attractive available.
In addition to lower rates, homeowners will find shorter loan terms available as well -- in the end, helping the homeowner pay off their home more quickly at with a lower monthly mortgage payment.
So wait... you're telling me, Congress actually did something that can help the average homeowner? Yep! Believe it... it's not too good to be true.
Think you might be eligible for HARP? Click here to start the
HARP pre-qualification process >>.
