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Do you have a home mortgage and have been considering refinancing? More specifically, is your home “underwater,” meaning that your outstanding balance on your existing home mortgage currently exceeds the value of your home?
If so, then the Home Affordable Refinance Program (HARP) may be a great opportunity for you to refinance your home mortgage, decrease your monthly mortgage payments, and potentially save you a significant amount of money each year.
On average, those who decide to refinance with a HARP home mortgage save around $200 a month, or $2,400 each year, making a HARP refinance a great way to help your monthly budget.
Revisions To The HARP Guidelines
In 2011, there were some significant changes to the HARP guidelines. Before the 2011 revisions, underwater homeowners with a mortgage balance of more than 25% of their home value were not eligible for the program. The revisions removed this cap, allowing the Home Affordable Refinance Program to extend its reach.
The 2011 revisions also removed the need for underwriting and appraisals, and decreased the fees for those seeking to refinance into loans with shorter terms.
Current HARP Guidelines
In order to be eligible for the Home Affordable Refinance Program, you must meet the following requirements:
- No missed payments in the last six months
- No more than one missed payment in the last 12 month
- Loan owned or guaranteed by Fannie Mae or Freddie Mac on or before May 31, 2009
- Primary residence with one to four units
- Loan-to-value ratio of more than 80%
(NOTE: if you have an FHA, USDA, or VA loan, you don’t meet the HARP guidelines and requirements for refinancing under this program.)
What Is The Loan-To-Value Ratio Of Your Home?
HARP refinance guidelines require a loan-to-value ratio (LTV) of more than 80%. The loan-to-value ratio is incredibly important for those looking to take advantage of HARP. Utilize the following equation to determine if your loan-to-value ratio allows you to meet that criterion of the HARP guidelines:
LTV = Outstanding balance on your existing loan compared to your home’s current value
For instance, if the outstanding balance on your existing loan is $180,000 and your current home value is $175,000, then your LTV is 103%, which meets the Home Affordable Refinance Program eligibility requirements.
If you meet the HARP refinance guideline requirements and you’re looking to refinance your underwater home mortgage but you can’t find a reasonable arrangement from a private lender, then you may wish to consider refinancing through the Home Affordable Refinance Program. Contact a Get A Rate mortgage expert (or call us at 1-866-955-5655) about starting the HARP qualification process!