The Home Affordable Refinance Program or HARP targets homeowners whose homes are worth less than their mortgages. This program allows homeowners to refinance their loans at current mortgage rates. They will not have to pay off the principal or get new mortgage insurance. Homeowners have until the end of 2018 to avail.
Here are five steps to prepare for a HARP home loan:
See if Fannie Mae or Freddie Mac has your back
HARP only refinances loans backed by Fannie Mae or Freddie Mac. These are government-backed mortgage associations. You can check if your mortgage is eligible by using the lookup tools of Fannie Mae and Freddie Mac. If you cannot find your loan in either tool, you are not eligible for a HARP loan. FHA, USDA, and VA mortgages are not eligible as well.
Check your start date
You must have started your mortgage in the middle of May 2009 or earlier. You can check your start date on your mortgage agreement. The cut-off was June 1, 2009, but it takes up to 60 days to finalize a Freddie Mac or Fannie Mae loan. Generally, mortgages dated May 16, 2009 and later are not HARP-eligible.
Check your mortgage insurance
You need the same coverage for your HARP loan as your old one. If you did not have any, then you are fine. However, if you have lender-paid mortgage insurance, some lenders may deny you a HARP refinance because they do not want to pay for the insurance. Be sure to find a lender who is willing to pay the insurance for your new HARP home loan.
Check your credit report
You have to be a good payer to qualify for a HARP loan. Your last six payments should have been on time, and you should only have 30 late payment days in the last 12 months. The lender will check this against your credit report, so make sure you check it first before applying for HARP.
Get the paperwork done
If you get through the first four steps without any trouble, you can now start your application. A HARP home loan requires the same paperwork as any other mortgage. The requirements include bank statements, homeowner’s insurance, tax returns, and many others. Ask your lender for a complete list of these requirements and gather them before applying for a HARP loan.
Preparing for a HARP home loan application properly increases your chances of getting approved. Check first if you are eligible to ensure that you are not wasting anyone’s time, including your own.