Do You Qualify for a HARP Loan?
What It Is and How It Could Help You Refinance Your Mortgage Loan
Beecher (February 6, 2013) — Mortgage interest rates are still incredibly low but qualifying for a refinance of your current mortgage may be tricky if you are "underwater" (when your current loan balance is greater than the appraised value of your home). Even responsible homeowners in this situation who have consistently made their monthly payments on time may find it nearly impossible to qualify due to the rigorous standards being imposed on lenders.
There is hope, however, in the form of the Home Affordable Refinance Program (HARP). HARP loans first were introduced in 2009, but have been updated to help boost participation. They address the need for refinancing options for homeowners who, while able to afford their current mortgages, want to lower their interest rate but don't qualify for traditional refinancing due to being underwater.
Although these loans have been available for several years, the recent changes make them more accessible for more homeowners. Appraisals, normally required with traditional refinancing, may not be required if a reliable automated valuation model (AVM) estimate can be provided. Another change makes it less risky for lenders in that the new lender is relieved of responsibility for anything that happened on the first loan, making them more willing to take on these loans. Any mortgage originator, like First Community Bank and Trust, is able to issue a HARP loan, regardless of who the original lender is, giving borrowers more options.
Who is Eligible?: In order to qualify for the program with First Community Bank and Trust your mortgage must:
- Be owned or guaranteed by Freddie Mac or Fannie Mae
- Have been acquired by Fannie Mae or Freddie Mac on or before May 31, 2009
- Not have been previously refinanced under HARP, unless it is a Fannie Mae loan that was refinanced under HARP between March and May of 2009
- Not include monthly private mortgage insurance
Homeowners must also be current on payments for the previous 12 months and have a credit score of at least 620. Because these are "full doc" loans, homeowners must be able to prove income and assets in order to qualify.
It is important to note that the above criteria are for general guidance only. Because each situation is unique, different criteria may apply. Interested borrowers should call to find out if they qualify. It is also important to realize that while the interest rates of a HARP loan will probably be more favorable than the homeowner's current mortgage, they will generally be above those of traditional fixed-rate loans being advertised.
If you're a homeowner and have questions about whether you qualify for a loan modification or refinancing under the HARP program, please call our mortgage loan department. We will be happy to answer any questions you may have. You may also call the Homeowner's HOPE hotline at 1-888-995-HOPE.