Are you "under water" in your mortgage?

Consider the Home Affordable Refinance Program (HARP)

Stressed Man over BillsIn 2009 the federal government launched the Making Homes Affordable Program in an effort to stimulate the struggling housing and real estate markets.  This program falls under the Department of the Treasury & Housing and Urban Development.  Under the Making Homes Affordable Program there are multiple programs to help individuals with their mortgages depending on their unique needs and circumstances.  One of the best kept secrets under this initiative is a program called Home Affordable Refinance Program  (HARP). To date, this program has not been utilized as effectively as was originally anticipated.  However, it is believed that this is due to lack of awareness and misconceptions by both lenders and consumers.

The goal of the Home Affordable Refinance Program (HARP) is to increase access to low cost refinancing for responsible home owners. The HARP specifically targets home owners who are unable to refinance because they are "under water" in their mortgage.  HARP is intended to help those who are currently financially stretched by their existing mortgage as it can help lower principle and interest payments. HARP will help those who are stuck in a risky ARM or variable rate mortgage by refinancing to a fixed rate mortgage.  With market rates as low as they are, right now is the perfect time to see if you qualify for the Home Affordable Refinance Program. Happy Family in Front of Home

For HARP home owners can even have negative equity in their home ( they owe more than their home is worth or "under water") which according to is 26.6% of all home owners nationally. However it is estimated that as many as 40% of Florida home owners and over 60% of Nevada home owners are "under water." Negative equity almost always makes people ineligible for traditional refinancing products. Originally HARP would allow people to borrow up to 125% of the value of their home. However, President Obama announced on October 24, 2011, while in Nevada, that borrowers will be allowed to refinance regardless of how far "under water" they are. 

President Obama also announced several other revisions including procedures intended to streamline the refinancing process, fee waivers / reductions and shielding banks from "buy back" risk on defaulted mortgages. This has helped to remove the bank's risk which will increase their willingness to participate. These changes are intended to kick start the program and make it available to even more Americans.  HARP was expected to expire on June 30, 2012 but has now been extended through 2013.

One of the more common misconceptions is that you have to have excellent credit to qualify for HARP, but that isn't necessarily the case.  You simply have to be current on your existing mortgage and have the ability to make mortgage payments in the future.  Also, unlike a home modification loan, which is designed to prevent a foreclosure for borrowers in default, a HARP loan will not have a negative impact on your credit rating.

Although the Home Affordable Refinance Program was initiated by the federal government, the loans themselves are not serviced by the federal government, nor are they considered an FHA loan.  HARP is administered through traditional mortgage lenders.  Chances are your current lender on your existing mortgage is participating in HARP.  However, this does not mean you have to use your current mortgage lender, as the program allows you to seek out and secure a HARP mortgage with another lender if you choose to do so.

If you are looking to lower your mortgage payments, HARP can help you accomplish this.  There are thousands of people who have been able to save over $200 a month on their mortgage payment with this refinancing program. Maybe you just want the peace of mind of moving from a variable interest rate to a fixed interest rate.  Either way you have nothing to lose and maybe everything to gain.

To find out if you qualify for the Home Affordable Refinance Program (HARP) stop by or visit the website of a mortgage lender to determine if they are participating in HARP.  Then provide the initial information they will need to determine if you meet the eligibility requirements for HARP.