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  • by Andrew Latham

    UnderwaterHouseIf you’re underwater on your home, you might have lost hope on refinancing your mortgage. It is true that if you owe more on your mortgage than its current market value, you are not going to get a line-up of lenders fighting to refinance your home. However, that doesn’t mean you are out of options. You may still benefit from today’s low-interest rates. Welcome to HARP, the government’s Making Home Affordable Program.

    The Program
    HARP allows homeowners who meet the program’s criteria to refinance their mortgages even through their homes are underwater. The program will refinance a loan that is between 105 and 125 percent of the home’s value. In other words, if the current market value of your home is $100,000, you can refinance up to $125,000.

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    Eligibility Criteria
    To qualify for a HARP refinance you must satisfy the following criteria:
    – You must be the owner and occupant of the home you wish to refinance.
    – Your mortgage must be owned or guaranteed by Fannie or Freddie. If you do not know if Fannie or Freddie owns your mortgage, you can ask your mortgage lender (or servicer) or call the following toll-free numbers set by Fannie (1-800-7FANNIE) and Freddie (1-800-FREDDIE).
    – You must be current on your mortgage payments. This is not really a program for homeowners who are struggling to make their payments. If you are behind on your payments you should consider a loan modification before you apply for a refinance.
    – As mentioned above, your loan cannot be worth more than 125 percent of the market value of your home.
    – You must prove you can afford the mortgage payments.
    – The new loan must be a good deal for you. In other words, it must either drop the overall cost of your mortgage or/and increase its stability (e.g. switching from an ARM to a fixed-rate mortgage).

    If you meet this criteria, you might qualify for a HARP refinance even if you’re underwater. You will have to hurry though, the program ends the 10th of June 2011. Visit MakingHomeAffordable.com for more details on this program. However, if you do not qualify for HARP, the government still offers another option to help you enjoy the current low-interest rates offered by lenders. Learn more in our next article in this series: Loan Modifications for Underwater Homes: Your Options.

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