Real Help for Underwater Home Owners - HARP
There are loan programs that really help homeowners that owe more on their homes than their home is worth. HARP is an acronym for Home Affordable Refinance Program. These loan programs allow homeowners to refinance into lower interest rates and more stable loan programs.
It is possible for a home owner owing $180,000 on their mortgage to refinance even though their home is valued at $144,000. This is 125% loan to value. And, if there is no private mortgage insurance being paid now, then there won’t be any PMI going forward. If there is PMI currently, the new loan will also have PMI.
Here are some details about these loan programs:
· The current loan must be owned by Fannie Mae or Freddie Mac and closed prior to June 1, 2009.
· Primary, second and investment homes are allowed.
· No late payments on the mortgage in the last 12 months.
· Cash back to borrower may not exceed $250.
· Some properties may only need an exterior inspection, some will require an interior and exterior and some may have a property inspector waiver.
· The new loan must provide a benefit to the borrower. This must be at least a 5% reduction in payment or refinance to a more stable loan product.
· The new loan may include the pay off amount of current loan, closing costs, pre paid escrows and points.
· A borrower may be added or removed on the new loan except when PMI is required.
· 125% LTV is available with credit scores 660 and above.
· 105% LTV is available with credit scores 620 and above.
· Second liens can be kept in place.
This is an excellent opportunity for homeowners that thought they couldn’t refinance unless they were at 80% loan to value, to be able to take advantage of today’s low interest rates. It makes sense to check it out. You may be able to save thousands of dollars over the course of your loan term.