Refinancing a mortgage can have several benefits to homeowners, such as lowering their interest rate to save money over the life of the loan. But, due to the current housing crisis, many homeowners have experienced a reduction in the value of their homes, which has prevented them from refinancing with a conventional home loan. The Home Affordable Refinance Program, which is part of the Home Affordable Modification Program, can be a solution for those homeowners who currently have mortgages through Fannie Mae or Freddie Mac. HARP Extension Allows More Homeowners to Refinance Their Mortgages HARP, which was scheduled to end in June of this year, has been extended to June 2011, giving more homeowners the opportunity to take advantage of the program. HARP allows homeowners who are ineligible for traditional mortgage refinances to refinance their current mortgages into a more affordable FHA loan. In 2009, about 190,000 homeowners were able to take advantage of an FHA loan modification to receive a lower interest rate on their mortgage. With the new FHA loan, homeowners can receive a lower, fixed interest rate, which will most likely lower their monthly mortgage payment. The homeowner can then save money each month and over time without having to worry about their rate changing. HARP Requirements Through the FHA loan modification program, homeowners can refinance up to 125% of their home’s market value. So, even homeowners with underwater mortgages, meaning that they owe more on their mortgage than their home is worth, can qualify. Homeowners must also be current on their mortgages to be eligible for HARP, which means that they cannot have been more than 30 days late on any mortgage payments over the last year. If a homeowner has more than one mortgage, only the first mortgage can be refinanced. How an FHA Loan Modification Can Improve Your Life With the high number of mortgage delinquencies and foreclosures, it is especially important for a homeowners to get help before they get too deep into financial trouble. If a homeowner has always been current on his or her mortgage payments, but foresees having trouble keeping up with upcoming mortgage payments, due to an increased interest rate or other factors, refinancing into a lower, fixed rate can prevent the risk of delinquency or foreclosure down the road. Compared to other type of home loans, FHA loans offer low rates that can save homeowners thousands of dollars over the life of their loan. Also, these loans are a great option for homeowners who may not qualify for other types of financing due to credit issues or low home values. Homeowners who would like to take advantage of the FHA loan modification program should first determine their eligibility for the program, which can be done on the Department of Housing and Urban Development’s website or with an FHA mortgage lender, who can also help homeowners apply for the program. HARP is a great way for homeowners to lower their monthly mortgage payments in order to have peace of mind and more money for other expenses. With rates at historical lows, now is a great time to take advantage of the FHA loan modification program!
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