HARP – What is it? Should I Apply?
HARP – What is it? Should I Apply?
You may have heard friends, family or neighbors mentioning a streamlined HARP refinance program. This is in fact a truly streamlined refinance option. We will breakdown the requirements and benefits for this program.
HARP – What does it stand for?
HARP stands for the Home Affordable Refinance Program. This is a streamlined refinance transaction, not to be confused with a Modification. The HARP Program is a shortened version of a conventional refinance transaction. The main reason is that there are less required documents. With a true HARP refinance, there is no Appraisal required, nor is there any minimum credit score or income requirement.
There are 4 Main Requirements for a streamlined HARP refinance.
- Current mortgage investor must be either Freddie Mac or Fannie Mae
- Current mortgage must have been originated or created before June 1st, 2009.
- Must not have more than 1x 30 day late payment in the last 7-12 months.
- Cannot have any existing liens or judgments on title against the property.
3 Main Benefits:
1. No Appraisal
There are many benefits from doing a HARP refinance. This program is an especially great program for those who owe more on the house than the house is worth. Since there is no required appraisal, in most cases, the value of the house is not a qualifying determinant. The reason the appraisal is not required is because Freddie Mac and Fannie Mae have a value for your house in their system already. The only time an appraisal would be required is if this value was not in their database. In such a case, the value would still not matter. The appraisal would serve merely to provide a value to their database for future reference.
2. No Minimum Credit Score
The bank or lender will need to pull credit for you in order to submit a full application. However, this is only to calculate risk scenarios. The actual Credit Score that comes back will not deter a person from refinancing with HARP. As far as credit is concerned, the banks and lenders are looking for a clean payment history and no liens or judgments on title to the property.
3. No Income Requirement
The HARP refinance option does not require a specific income in order to be approved. The applicant must have some type of income. The amount does not matter. This is an especially good option for Self-Employed applicants that might not be able to show enough income to qualify under conventional underwriting guidelines. Also, this is a great option for those who have multiple investment properties.
At this point you might be asking: “Isn’t this the type of refinancing that got us all into this big mess in 2008?” And this is a very valid question. The answer is simple. Since those loans were created without a true qualifying measure, this refinance option must, in a way, mirror that. However, the main focus with HARP is refinancing those who have had a clean payment history. Repayment ability is the true reason behind HARP. If you can make a payment with a higher interest rate and a higher payment, then if they lower that payment and interest rate, the chances of default on a mortgage lessen substantially. Mortgage default rates went through the roof so Freddie Mac and Fannie Mae stepped up to assist in lessening the disaster by implementing this program.
Call your bank or lender today and see if you qualify for this streamlined refinance option with HARP. This program is going to expire by the end of 2016. It is worth the phone call.
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