I wrote previously about the Home Affordable Refinance Program (HARP), one of the best kept secrets for homeowners who want to take advantage of low mortgage rates, but who don’t have a lot of equity in their homes.
The Federal Housing Finance Agency (FHA) has announced the program will be extended through June 30, 2012.
HARP allows a homeowner who has suffered from a decline in home prices to refinance their mortgage into a more affordable, fixed-rate loan. This is not a government loan, however. Loans for principal residences, second homes and investment properties are available, and there is generally no minimum credit score requirement.
In addition, FHA announced a change that allows homeowners whose mortgages were acquired by Fannie Mae and Freddie Mac before June 1, 2009 to participate. (Previously the cut-off date was March 1, 2009). This means homeowners who may have previously been told they are not eligible may in fact be able to use HARP to refinance.
The program has been criticized for falling short of the goals set for it. Could it be because hardly anyone knows about it? Since my first article about it ran, I’ve heard from borrowers who had no idea the program existed.
Fortunately, I’ve also heard from some who are taking advantage of HARP to refinance their mortgages. One borrower, “Jessica,” told me she was able to use it to lower her monthly payment by about $300 even though her credit scores aren’t terribly strong. In fact, when she first learned about the program, she thought it was a scam because it sounded too good to be true.
If you’ve tried to refinance your mortgage but have been turned down because you don’t have enough equity, or if you have been told you must pay for private mortgage insurance (PMI), you may want to find out whether you qualify for HARP. A free evaluation is available at YouCanRefi.com or you can talk with any Fannie or Freddie- approved lender who participates in HARP. Unfortunately, not that many do.
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Image: Keven Law