There was a certain period of time which Americans call as the real estate bubble. The value of real properties was quite good. That period is over though and the cost of the properties has fallen tremendously. It has always been believed that the value of whatever real estate people have would appreciate as time goes by but this was not the case during the time of recession. Instead, its value dropped and the interest remained high. It is during these times when homeowners are scrambling to deal with their monthly mortgage payments just so they will not have arrears and their accounts be considered delinquent.
Getting to Know the Home Affordable Refinance Program
Refinancing programs were set up the government to help those homeowners who have been struggling to manage their mortgage payments among other things. They have come up with the Home Affordable Refinance Program or HARP. This program started way back in 2009 and it is also known through other names such as the Obama Refi Plan, the HARP Loans program, as well as the making Home Affordable Plan. Sometimes it is also referred to as the Relief Refinance or the DU Refi+.
Since its advent, the program has undergone several modifications in terms of its conditions as well as its coverage. The latest version would be the HARP 2 refinance program that became available just this March 2012. Changes have been instituted to make it more suitable to the needs of the homeowners. One difference that the Home Affordable Refinance Program has with the conventional mortgage loans is that the borrowers do not have to pay down the principal amount of the loan. Furthermore, they are not required to make payments for mortgage insurance for it as well.
The second version of the Home Affordable Refinance Program also made it possible for other borrowers who previously did not qualify based on the original terms and conditions to become eligible. Originally, the cutoff was 125% LTV. Meaning if your LTV was greater than 125%, you couldn’t refinance your home. The 2nd version of the HARP Loans program has an unlimited LTV. Meaning that it doesn’t matter how underwater you are, you can still refinance.
Checking Out the Details for Eligibility (Check HARP 2 Eligibility)
One of the first things that borrowers have to take note of is if their mortgage is covered by Fannie Mae or Freddie Mac. Fannie Mae refers to Federal National Mortgage Association (FNMA) while Freddie Mac is Federal Home Loan Mortgage Corporation (FHLMC). The same mortgage has to have been secured by either of the two before June 1st way back in 2009. If the mortgage is backed by any of these two then there is a higher probability of the qualifying for the Home Affordable Refinance Program. Unfortunately, those whose mortgage was taken under the Federal Housing Administration (FHA), USDA or a combination will not be able to qualify for it. However, if you have an FHA loan, you may qualify for the FHA Streamline Refinance program – another government program aimed at helping underwater homeowners refinance.
Further Eligibility Criteria for the HARP 2 Program
In order to be eligible for the HARP 2 program, the borrowers must be current on all payments in the last 6 months and can have 1 late payment in the past 12 months.