To substantially reduce mortgages, borrowers may opt to refinance at a lower interest rate and/or increase payments on the mortgage. However, in cases where the house has lost its initial value as shown through a high LTV or loan-to-value ratio, borrowers may choose to apply for a HARP or Home Affordable Refinance Program loan from lenders like Primary Residential Mortgage, Inc.
Lenders approve more loans to borrowers with low LTV ratio since the value of the home is higher than its loan amount. The house may be sold at breakeven or even at a profit by the lender if it forecloses. Conversely, with a high LTV ratio as evident in homes which are damaged by calamities, borrowers may be hard-pressed to find a lender as the loan or outflow of cash is higher than what could be received when the house is sold.
Why should I apply for HARP?
Introduced by the government, HARP loan helps underwater borrowers by refinancing their mortgages. Further, refinancing through HARP lowers the monthly payment and shortens the term of the loan. More so, such program provides lower interest rates.
What are the requirements for HARP?
Eligibility depends on some factors. First, the loan should be owned by mortgage financiers Fannie Mae or Freddie Mac. Second, LTV ratio should be greater than 80%. Remaining up-to-date with mortgage payments, third, is another factor. There should be no late payments in 6 months. Further, HARP allows only one late payment in a year. The home, fourth, should be the primary or secondary residence of the borrower or investment property. And fifth and last, the mortgage was originated before June 1, 2009.
A good program’s foundation should be grounded in reality. The reality is that as a response to increasing mortgage debt, the government has laid down a program to let the borrowers finally have the chance to breathe underwater.