We do our best here at the Quicken Loans Zing Blog to keep our readers informed on everything mortgage related so they can make the best decisions when it comes time to figure out their home loan needs. Recently we’ve discussed confusions on adjustable rate mortgages, and in the past we’ve educated readers on everything from jumbo loans to the intricacies of escrow, and not too long ago we tackled some myths about HARP, aka the Home Affordable Refinance Program. It turns out that no matter how straightforward HARP may be, some find it confusing and too good to be true. It’s time we took a second crack at examining common myths about HARP.
Myth: HARP Qualifications Are so Complex, No One Can Qualify
While HARP does have specific qualifications, many homeowners would be surprised to find out that they meet the requirements just fine. Here are the requirements listed as clear as possible from MakingHomeAffordable.com, but we’ll break them down a little more for clarity.
- The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
- The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
These are the two big ones, and the most clear of the requirements that homeowners must hit. The HARP program doesn’t include mortgages not associated with Freddie or Fannie. They also must have been sold before the May 31 deadline.
- The mortgage cannot have been refinanced under HARP previously unless it’s a Fannie Mae loan that was refinanced under HARP from March – May, 2009.
This requirement was put in to assure no homeowner can refinance into HARP again, with the exception of the three month period in 2009. You can only do it once, people.
- The current loan-to-value (LTV) ratio must be greater than 80%.
Straight from our incredibly informative Quicken Loans mortgage glossary, loan-to-value ratio is the percentage of the loan amount to the appraised value of the property. It goes on to say that low LTV ratios are considered to be below 80%. So if the appraised value of your home plummets suddenly like it did for many HARP-eligible homeowners, your LTV can rise above 80%. And finally, you have to practice good finance in order to be eligible for HARP.
- The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.
This is pretty straightforward as well: you must have been current on your payments for the past year and up until you apply for HARP. This may seem obvious, but having timely mortgage payments is essential to demonstrating you won’t mismanage the second chance that is the HARP program.
That wasn’t so bad now was it? HARP’s requirements are no more daunting than any other home loan, but more things may be asked of you once you get further in the application process. Don’t be deterred by any mysterious aspect of HARP. It’s helped out many homeowners before and it certainly has an expiration date so hop on it while you still can.