HARP to the Rescue
Rewind several years. A younger you saved your pennies and nickels, worked hard, and eventually bought a house. Like everyone else, you were after the American dream: the white picket fence, the dog, the backyard barbeques. Then the housing bubble burst. Your home’s value plummeted, and you struggled more and more to pay the mortgage.
You’re not alone. Millions of Americans are in a similar position. In fact, 3.5 million homeowners are currently in default or seriously delinquent on their loans, and 14.6 million mortgages are underwater, meaning that the homeowners owe more than their homes are worth.
In an effort to help these struggling homeowners and the economy as a whole, President Obama just announced an overhaul of the Home Affordable Refinance Program, also known as HARP. Since its creation in 2009, HARP has helped approximately 900,000 homeowners refinance, a number that disappoints many who feel the program should be made available to more Americans. The recently announced changes to HARP are designed to do just that and are projected to open up refinancing options to an additional 1 to 2 million borrowers. The program has been extended to run through 2013.
The purpose of the overhaul is twofold. It aims to stimulate the economy by keeping more money in your pocket, and it looks to stabilize the housing market by keeping people in their homes. Acting director of the Federal Housing Finance Agency Edward J. DeMarco is adamant that the changes to HARP will make it easier for more people to refinance their mortgages.
Who’s eligible?
In order to qualify for the program, you must have a Fannie or Freddie-backed mortgage. In addition, you must not have missed a payment in the last 6 months and you can only have made one late payment in the last year.
Breaking from old stipulations, the new HARP will allow you to refinance even if you owe more than 125% of the value of your home. In fact, there’s no longer any cap, so in theory, you could owe a million dollars on a house that’s now worth only 100k and still qualify to refinance. This is a big deal for homeowners, many of whom were left out of the old HARP because they owed so much more than the current value of their home.
If you already refinanced through HARP, or if Fannie and Freddie got your loan after June of 2009, you won’t be eligible for the program.
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