Homeowners may qualify for the Home Affordable Refinance Program (HARP) if they fail to get a HAMP (loan modification) from their lenders.
Q: Long story short, my house is underwater. I am currently talking to my mortgage company for a HAMP or HARP. I collect Social Security disability as my only source of income. My credit score is about 750.
In your opinion, am I eligible for a refinance? I have a HELOC loan on the home as well. Will there be a HARP 3.0, and do you think I may qualify for that round? What are my options?
A: Your situation is not unique.
Let’s start with your ability to get a HAMP (Home Affordable Modification Program) loan modification. Your disability income may qualify you for HAMP, but depending on your real estate tax and insurance expenses, your lender would be the one that decides if you’re eligible for a loan modification.
The reality is that most homeowners have failed to get a loan modification from their lenders, so don’t place all of your bets here.
The real question for you and your lender is whether you can truly afford to stay in your home. You didn’t indicate the interest rates on your mortgages. You’re on a fixed income, and it seems these days that housing expenses keep increasing. We’re not necessarily talking about mortgage expenses, but real estate taxes, insurance and other household expenses seem to be rising.
While you might get a small reduction on your monthly mortgage payment if your lender is willing to give you a loan modification, you will still have to determine if that reduction will help you substantially in exchange for damaging your credit.
Since most homeowners failed to get loan modifications from their lenders, let’s talk about the Home Affordable Refinance Program, and whether you’d qualify for a HARP refinance.
First, HARP allows your lender to give you a loan refinance, but you should know that you can shop around. Speak with a couple of lenders and see who gives you the best rate and the best deal to refinance your current loan. For more information on eligibility for HARP, visit the website http://www.MakingHomeAffordable.gov.
Here are some of the most important rules: Your loan must be owned or guaranteed by Freddie Mac or Fannie Mae, and your loan must have been sold to Fannie or Freddie on or before May 31, 2009; you can’t have refinanced under HARP previously; you must be underwater on your loan; and you must have an on-time payment history for the last 12 months.
The current program is often referred to as HARP 2.0, because the government made significant improvements on the first round of HARP.
I don’t think anyone has imagined HARP 3.0. Everyone in the industry is hoping that HARP 2.0 is going to work. Given election year politics, we don’t think it’s likely that we will see a HARP 3.0 plan or something like it. With talk in real estate circles that the market is improving, there is less willingness in Washington to take on any new proposals that might increase the deficit or provide additional risk to taxpayers.