If you are a Florida homeowner facing debts that your income does not cover, you may think that bankruptcy is your only way out. Depending on your exact situation, you may be right. However, if your home is your largest asset and your mortgage payment is one of the biggest you make every month, you should check out HARP as a possible alternative to bankruptcy.
Mortgage Reports explains that the Home Affordable Refinance Program is a federal program established in 2009 to help homeowners such as you. In the past nine years, HARP has allowed over 3.3 million Americans to refinance their homes and reduce their mortgage payments, often by as much as 30 percent.
How HARP works
To qualify for HARP, your home must be upside down; i.e., its value must be less than the remaining amount of your mortgage. The home also must be one of the following:
- Your primary residence
- Your vacation or second home
- Your investment property
In addition, you must be current on your mortgage payments. If you have both a first and second mortgage on your home, that is not a disqualification per se. However, not only can you not combine your first and second mortgages into one refinancing package, you also must obtain permission from your second mortgage holder to refinance your first mortgage.
Mortgage lender shopping
Assuming you meet the eligibility requirements, you next must find a HARP-approved mortgage lender. It need not be the lender who holds your current mortgage. Bearing in mind that mortgage rates vary from lender to lender, you can shop around for the lender offering the best rate. Another thing you should keep in mind is that many of the original HARP requirements changed in 2012. Therefore, even if a lender previously turned down your HARP application, you can reapply. You may be accepted this time.
The biggest downside to HARP is that it expires in December, 2018. Therefore, if you think HARP may be the answer to your current financial difficulties, you need to start looking into it immediately.
While this information is not legal advice, it can help you understand the HARP process and what to expect.