The Home Affordable Refinance Program, or HARP, was instituted in March, 2009 and became a moderately successful tool for homeowners in the Vero Beach mortgage market as well as other markets all across the United States.
Help for Vero Beach Mortgage Borrowers
Because of fairly conservative loan-to-value restrictions, HARP was improved to HARP 2.0 in 2011 with LTV ratios higher than 125%.
HARP's primary existence is for homeowners who are underwater — that is, where the mortgage balance exceeds the free-market value of the home — to refinance their loans and save money over the long haul. Until recently, the program was not often utilized for investment properties. In a newly announced Federal Housing Finance Agency (FHFA) report, roughly 11% of HARP 2.0 loans were used to refinance investment properties. By refinancing, real estate investors could potentially reduce their monthly Vero Beach mortgage payments by two full percentage points. This would equate to a savings of several hundred dollars a month — and thousands over the life of the loan.
HARP Guidelines
Interestingly, HARP guidelines make no distinction between owner occupied properties and investment rental properties. The mortgage must be owned by Freddie Mac or Fannie Mae. All a borrower needs to do is check with a lender to find out its status. Alternatively, this information is also available online. Other requirements include a mortgage balance that is greater than 80% of the value of the property; the borrower cannot have been more than 30 days past due in the last six months. In addition, the borrower can not have already used a HARP refinance on the property.
HARP Benefits
The benefits of a HARP refinance are many, for both investment properties and primary residences. Regardless of whether you owe more than 80% LTV on your mortgage, a HARP refinance doesn't require private mortgage insurance (PMI.) Plus, there are no closing costs that need to be paid up front. Borrowers can include them in the loan amount. Couple those savings with the interest rate savings and an investor can save thousands of dollars that can be pocketed or reinvested in the purchase of additional rental properties.
To date, the HARP program has produced savings for more than 400,000 investors. If interest rates remain fairly low there's plenty of reason to think that total will continue to rise.
So if you're a savvy investor, it's probably a good idea to look into whether you are eligible for a Vero Beach mortgage refinance using HARP 2.0. After all, saving money on your rental property, increasing cash flow and freeing up money for other potential investments are probably reasons you bought investment property in the first place!
Many lenders offer HARP loans for rental properties, so shop around. Remember, if your application is denied by one lender it doesn't mean it will necessarily be rejected by another. Most Vero Beach mortgage lenders will require copies of your income tax returns for the past two years, a copy of your lease agreement on the rental property, proof of the rental income, proof of your normal income, and verification of other assets in the event your rental income ends or is interrupted.
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