Essentially, the federal government created the HAMP program in order to aid homeowners who are at risk of foreclosure. HAMP does this by subsidizing lender modifications to borrower home mortgages. In order to qualify for a HAMP modification, you must satisfy the following requirements:
- The home must be your primary residence.
- The mortgage must be less than or equal to $729,750.
- The mortgage must have been closed prior to January 1, 2009.
- The housing payment, including principal, interest property taxes, HOA fees, and insurance, mustn't exceed 31% of your gross monthly income, before taxes.
- You must have a documentable hardship, typically consisting of either a substantial decrease of income or a significant increase in expenses that were beyond your control.
- You must have a steady source of income that is sufficient to afford the modified mortgage payments.
Who Should Consider Obtaining a HAMP Loan Modification:
- Eligible borrowers who have experienced a financial hardship as a result of the U.S. housing market collapse
- Borrowers who are cannot feasibly afford monthly mortgage payments but would be able to afford an adjusted mortgage rate
HARP OverviewThe Home Affordability Refinance Program, abbreviated as HARP, was designed to provide financial relief for underwater homeowners, who owe more than their home’s value as a result of the burst of the housing market bubble. Through this program, these formerly ineligible borrowers can secure refinance loans to capitalize on the exceptionally low mortgage rates that are currently available. Unlike the HAMP program, HARP does not require you to be at risk of foreclosure or experiencing financial hardship; rather, to qualify for HARP, you must satisfy the following HARP requirements
- You must own less than 20% of their home’s equity.
- You must have made all mortgage payments on time, or less than 30 days late, within the past 6 months prior to application
- The mortgage must have been acquired and securitized prior to June 1, 2009.
- You must have a mortgage that is backed by Fannie Mae or Freddie Mac.
Who Should Obtain a HARP Refinance Loan:
- Borrowers who lost a significant amount of equity due to the burst of the housing market bubble
- Eligible borrowers who are underwater and cannot refinance with traditional loan programs
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