Bundled closing costs into the new loan. Required less paperwork than a traditional refinance, making the application process smoother. No minimum credit score was required to qualify for a HARP loan, and closing costs which come with all refinance loans could be rolled into the new loan.
Borrowers didn't have to go to the table with up-front cash. With HARP, borrowers had the ability to refinance at lower interest rates to allow more flexibility in monthly budgets. To qualify, borrowers had to meet HARP eligibility requirements such as:.
An underwater loan. On-time payments. The goal of a HARP loan was to help make monthly payments more affordable, but borrowers had to demonstrate that they had been making their payments on time. They had to have no payments more than 30 days late in the past six months and no more than one late payment in the past 12 months.
If it did, look to see if you are paying monthly mortgage insurance. There are different types of private mortgage insurance and not all kinds are paid monthly. One such example is lender-paid mortgage insurance for which your lender pays PMI on your behalf each month. If your bank says no, ask another bank and you may get a different answer.
The key is that the new loan has mortgage insurance coverage at least equal to the mortgage insurance coverage on your current mortgage. There are plenty that of banks that can help you. Only rate-and-term refinances are allowable. The loan must meet typical program eligibility standards. Yes, condominiums can be financed on the HARP refinance program. Warrantability standards still apply. Condominiums can be financed on the HARP refinance program.
If your current lender is unable or unwilling to help, remember that you can take your HARP loan to any participating bank in the country. Other banks may know what to do with condos. No, you cannot consolidate multiple mortgages with the HARP refinance program. No, the Home Affordable Refinance Program is for first mortgages only. Second mortgages cannot be refinanced via HARP, nor can they be consolidated into a first mortgage. Second liens are meant to subordinate. Just be sure to mention your second mortgage at the time of application so your lender knows to order the subordination for you.
With the HARP refinance program, second liens are meant to subordinate. Second lien holders know this, however, not all second lien holders will agree to it. This is against the spirit of the program, but second lien holders are within their rights to deny the refinance. Second mortgages are ignored as part of HARP. Second mortgages are a non-factor in HARP 2. You cannot combine your two mortgages, however. You can only refinance your first mortgage.
Only your first mortgage is eligible for Making Home Affordable. If your current bank is not setup for HARP, find a new lender. HARP is available through any participating bank and there are a lot of them. Free, no-obligation HARP quotes are available online, too. Yes, mortgage balances can be increased to cover closing costs in addition to other monies due at closing such as escrow reserves, accrued daily interest, and a small amount of cash.
In no cases may loan sizes exceed the local conforming loan limits, however. In most U. HARP mortgages are underwritten like most other mortgages. HARP does require verification of income, but some lenders may require it anyway. If you cannot or will not verify income with your lender, you may show 12 months of PITI in reserves as a substitute for actual verifiable income. Making Home Affordable does not enforce maximum income limits.
There are no income restrictions with the Home Affordable Refinance Program. Many people confuse the two. It depends on the terms of your modification. With the HARP loan, a borrower on the mortgage can be removed via a refinance so long as that person is also removed from the deed; and has no ownership interest in the home. This is where HARP comes in. So, homeowners who are underwater on their mortgages but otherwise making their payments on time can save tens of thousands of dollars over the life of their mortgage!
The program also has other benefits built in to help you save money when it comes time to close on the new loan:. Traditional refinancing requires homeowners to pay hundreds of dollars for a new appraisal, but some HARP mortgage lenders allow homeowners to bypass the appraisal process and use an automated home value system instead.
Your lender will be able to tell you more about this when the time comes. Because an ARM payment can quickly become too much for homeowners to afford, moving to a consistent and lower payment through HARP could lower your overall mortgage amount. Qualifications for refinancing with HARP can vary greatly depending on your mortgage provider. However, the federal guidelines for eligibility are pretty straightforward:.
You can complete a Home Affordable Refinance Program loan with any participating mortgage lender, or your existing mortgage servicer. It's smart to compare offers from different HARP lenders. The path of least resistance goes through your existing mortgage servicer, which is already familiar with your mortgage and financial situation. In some cases, however, your loan servicer may not staff the loan officers to bring you through the HARP refinance process. Not all HARP lenders are created equal.
Interest rates and loan terms will undoubtedly vary among lenders, so consider shopping around for the rate and term that best fit your goals. In this manner, treat your HARP refinance as you would a traditional refinance. Fees and costs will also vary among HARP lenders, so obtain estimates of refinance fees and closing costs from lenders you are considering.
You will quite likely shoulder the costs of application, processing and title search, so shopping around will net you the best deal. If your finances can handle it, you may want to consider refinancing into a loan shorter than a year term because HARP reduces certain risk-based fees for homeowners refinancing into shorter terms. As you investigate the Home Affordable Refinance Program's requirements, you may come upon roadblocks that indicate the program may not be a great fit for you.
You cannot use HARP for a cash-out refinance to pay-off other debts. HARP refinances are meant to assist homeowners who are underwater on their mortgages, or close to it.
HARP is not intended to help homeowners who are current on their mortgage payments to satisfy credit card debt or car loan payments. You typically can't avoid closing costs and fees in a HARP refinance. Just as in a traditional refinance, your HARP lender will probably require that you pay the closing costs and fees at the time of the refinance closing date.
These costs and fees can add up and take several years to recoup from the per-month savings resulting from a reduced interest rate and mortgage payment. The general rule is that the larger the mortgage amount, the greater the potential per-month savings to you. You may discover that a HARP refinance does not substantially reduce your monthly payment. In some cases, factors out of your control may contribute to high closing costs.
For example, in states where title insurance premiums run high, a HARP refinance may not be worth it for some borrowers because it would take too long to recoup the title insurance costs of the refinance. Additionally, consider the remaining principal balance of your current loan in deciding whether to proceed with a HARP refinance.
The lower the balance, the less likely a HARP refinance will be worth it. And if you do decide to pursue a HARP refinance, make sure the mortgage term fits your needs. If you choose to go with a fixed-rate mortgage, you can refinance into a year term or one as short as 8 years.
For an adjustable-rate mortgage, you can choose between a five-, seven- or year term. To date, 3. Also, HARP is a one-and-done program. You can refinance through HARP one time only. Because of this restriction, timing may be key in locking in the lowest interest rate and best term for your refinance. What if you are not eligible for HARP? What are your options if you are not eligible for HARP? Or, perhaps your current loan is eligible for HARP.
Should you refinance through the program? What are your alternatives if you choose not to? Consider these five alternatives to HARP:. You could simply continue on cruise control and stick with the rate and terms of your current loan.
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