HARP allows borrowers who qualify to refinance into a more stable and affordable mortgage. Newly announced rules will allow more borrowers than ever to take advantage of the program.

Am I Eligible for HARP?

You must meet all of these criteria to be eligible for HARP:

• Your mortgage must not be an FHA, VA, or USDA loan.
• Your mortgage must be owned or guranteed by Fannie Mae or Freddie Mac.
• You must be current on your mortgage and have not been more than 30 days late in the last six months.
• You must be able to afford the new mortgage payments.
• Your mortgage start date must be before June 1, 2009.
• Individual mortgage lenders may have additional requirements for HARP approval.

Does HARP have any up-front costs?
Yes. HARP initiates a new loan on your mortgage, so you must go through the loan application process, including applicable fees.

How to I Apply for HARP?

• First, confirm that your mortgage is owned or guranteed by Freddie Mac or Fannie Mae. To look up whether your loan is backed by Fannie Mae, visit their Loan Loookup tool at www.fanniemae.com/loanlookup/. Freddie Mac loans can be looked up at freddiemac.com/corporate/.
• Second, gather your financial paperwork, just as you would with any mortgage refinance. You’ll need pay stubs, W-2s, homeowner’s insurance paperwork, bank statements, and personal ID, and recent tax returns.
• Next, contact any mortgage company that is approved by Fannie Mae or Freddie Mac. This may be the company that holds your current mortgage, or you may refinance with any other approved company. They will help you make a final determination about whether you qualify for HARP.
• Compare refinance offers, factoring in proposed interest rates, closing costs, and other fees.

What has changed in the new rules for HARP?

Many things have changed, but the most significant new rules is that there is no Loan-to-Value cap now. Previously, your mortgage loan balance could not exceed 125% of the current market value of your property. That limit was removed entirely in the new HARP guidelines.

The program has also been extended through December 31, 2013.

If you speak with a mortgage adviser at a HUD-approved nonprofit housing counseling agency (like Springboard), you can get a free consultation. A mortgage adviser can evaluate your situation and will be able to tell you if you qualify for HARP under the newly revised rules.

Visit our housing counseling site HomeOwnership.org for more information, or call us at 1-800-294-3896 any time to talk with a mortgage adviser free of charge.

We also wanted to take this opportunity to let all servicemen and women know about a program that might greatly benefit you and your families.

Housing issues are a concern for many families across our country, military and civilian.  A variety of programs are designed to help individuals and families with housing.  One program is the Department of Defense (DOD) Homeowners Assistance Program, or the HAP program.  This program is authorized by a law from 1966 for service members and federal civilians.  The program is administered by the U.S. Army Corps of Engineers (USACE) and pertains to all eligible services members in all branches of the military (including Coast Guard) and eligible federal employees (including non-appropriated fund).

The law provides some monetary relief to homeowners who are eligible service members and federal employees. These homeowners may be eligible for relief if they suffer a financial loss on the sale of their primary residence when a base closure or realignment announcement causes a decline in the residential real estate market and, therefore, they are not able to sell their homes under reasonable terms or conditions.  If eligible applicants cannot sell their homes under reasonable terms and conditions, the U.S. Army Corps of Engineers may acquire their homes.

The American Recovery and Reinvestment Act of 2009 has temporarily expanded the HAP program to assist service members and DOD employees who are wounded, injured, or became ill when deployed. The Base Realignment and Closure (“BRAC”) program also assists surviving spouses of service members or DOD employees who were killed or died of wounds while deployed; service members and civilian employees who were assigned to BRAC 05 organizations; and service members who were required to permanently relocate during the home mortgage crisis.

To qualify, a service member must have: owned his or her home prior to July 1, 2006; have PCS (Permanent Change of Station) orders dated between February 1, 2006 and September 30, 2010; reassigned to a new duty station or home port outside a 50-mile radius of the member’s former duty station or home port; and suffered a decline of at least 10% in home value from the date of purchase to the date of sale.

For more information about this program, visit:  http://hap.usace.army.mil/.  This site contains the downloadable application and guidance package and a map for all 50 states and provides you a contact person for the region where your property is located and where to go for more assistance.  If you or someone you know fits the guidelines listed above, please take the time to review and share this information.

Thank you to our service members, both active and retired, and your families for your dedication, service and sacrifice to our country.

A portion of this article was courtesy of Bonnie Spain, CEO for CCCS of the Black Hills, South Dakota, a National Foundation for Credit Counseling (NFCC) member agency www.nfcc.org.  Springboard is an NFCC Member Agency.

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The Home Affordable Refinance Program (HARP) is designed to help these borrowers. If you have a mortgage loan that is owned or guaranteed by Fannie Mae or Freddie Mac and you are current on your mortgage (and haven’t made a payment more than 30 days late in the last six months), you may be eligible for HARP.

HARP is a refinance that puts you in a more stable mortgage that helps you take advantage of lower interest rates. Under new changes to the HARP program, you may be able to refinance while keeping your current mortgage payment. That means, with lower interest rates, your loan will be paid off faster. Each mortgage payment you make will go farther toward rebuilding equity and giving you full ownership of your home.

You can take advantage of this program even if you are underwater on your mortgage and owe more that 80% of your home’s current value. Having more of your monthly mortgage payment go towards the principal of your loan will help you make up that deficit and shorten the overall term of your mortgage.

Not all loans qualify for HARP, and if you do take advantage of the program, you will have to apply and go through the full loan application process. This may include loan refinance fees.

If you speak with a mortgage adviser at a HUD-approved nonprofit housing counseling agency (like Springboard), you can get a free consultation. A mortgage adviser can evaluate your situation and will be able to tell you if you qualify for HARP. Our advisers are up to date with all the current federal regulations and assistance programs. Call anytime if you have any questions or concerns about your mortgage loan.

Visit our housing counseling site HomeOwnership.org for more information, or call us at 1-800-294-3896 to talk with a mortgage adviser free of charge.

Special Homeownership Resources

If you are considering homeownership, you should be aware of various scams that predatory lenders use to prey on people who are either attempting to get their first home loan, or who are trying to save their homes from foreclosure.

Here are some posts to help you protect yourself from predatory lenders and avoid scams:

Three things you should know about loan mod scams

HUD launches PreventLoanScams.org

10 warning signs of a mortgage modification scam

How to avoid mortgage modification scams

11 tips for avoiding predatory lending

5 tips to avoid foreclosure scams

Remember, you can always call to talk to a HUD-approved housing counselor if you have any questions or concerns. A housing counselor can go over paperwork with you to make sure you’re not being taken advantage of.

The question of whether it’s better to rent or own your place of residence is not one that can be answered definitively. The fact is, either option can be the right choice depending on one’s specific circumstances.

Over the past few years of economic turmoil, no shortage of experts and pundits have declared that it’s better to rent than to own a home. Offering this kind of advice without regard to the specific situations of consumers is irresponsible.

When it’s better to rent:

If you are unsure about your future, renting is the right move. Specifically, if your income, career, marital status, or other circumstances are likely to change, then buying a home would probably be ill-advised.

Why homeownership is a good idea in the long run:

As we’ve discussed before, owning your home is part of a wise long-term retirement strategy. If you opt to become a lifelong renter, you’ll have to make those rent payments throughout your retirement years. If you spend a few decades paying off a home mortgage before retirement, you’ll save yourself a huge ongoing financial obligation. This can make your retirement years much easier and more comfortable.

Many experts who are in favor of renting point out that there are better ways to save money every month than to put it into the property taxes, maintenance, and other ancillary costs of homeownership not faced by renters. This may be true, but it is ultimately a gamble. Are you really putting aside all of the money you save by renting? Is it being invested safely? When it’s time to use that money to pay your rent in retirement, how much will you need? Since we can’t know what rents, taxes, and other costs will be in the future when we retire (though we can safely assume they will all be higher). We also don’t know how long we will live, so it’s impossible to prepare for how many months’ worth of rent payments we will need late in our lives. Homeownership is a safer bet, one that rewards you more the longer you live.

Deciding whether to buy a home or remain a renter is an individual decision that must be made very carefully. We always stress homeownership as a long-term proposition, so you have to think ahead and consider what kind of future you see for yourself. If that future has you owning your home, then start preparing as early as possible.

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Special Homeownership Resources

Making your mortgage payments on time every month isn’t the only obligation you have as a homeowner. In addition to taxes, insurance, utilities and other financial obligations, your home’s upkeep is also your responsibility.

Former renters who are new to homeownership may be overwhelmed by all of the new duties they must take on.

Spring maintenance

• Clean out gutters
• Service air conditioner
• Check home exterior–paint, windows, roof, etc.
• Begin spring-summer lawn care

Fall maintenance

• Service furnace
• Clean/service fireplace
• Weather seal windows, doors, etc.
• Seal cracks in driveway
• Check insulation
• Snow and ice removal

Regular maintenance

• Check/change air filters as needed
• Test fire alarm & change batteries
• Check other alarms (radon, carbon monoxide, etc.)
• Check plumbing for leaks

This is just a bare minimum when it comes to the duties facing you as a homeowner. Clearly it is beneficial to be as handy as possible so you can complete most of these tasks yourself. Some jobs, like servicing your heating and AC, will require a professional. It’s tempting to forgo these service calls, but replacing these systems is very expensive. Regular service calls are a kind of insurance that can save you thousands of dollars by not letting problems escalate.

Depending on the seasons where you live, you may have to do things like swap storm windows for window screens, drain and shut off outdoor plumbing fixtures, winterize your lawn sprinkler system, and service your home humidifier.

You’ll also need to prepare your lawn care equipment for winter. Drain the gas from your lawn mower in winter, and if you have a snow blower, drain its tank in spring.

It may seem like an awful lot of responsibility, and it is. There are many great rewards to homeownership, but it is a rigorous undertaking, and it takes organization and planning to be successful.

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Special Homeownership Resources

Utilities

Your first step as a homeowner is to have all of the utilities transferred to your name. Some services can be transferred without having to be shut off.

If your closing went as it should, the seller will have paid off all utilities as of the closing date, leaving you with a fresh start.

Mortgage payments

Your mortgage payment is now your most important financial obligation; you should make sure you make this payment in full and on time every month. If possible, set up automatic payments through your bank to be sure you don’t miss any mortgage payments.

Taxes and Insurance

Most likely, your taxes and insurance will be escrowed; that means they’ll be included in your monthly mortgage payment and you won’t have to worry about making separate payments.

If your taxes aren’t escrowed, you should set up a savings account to pay them when the time comes. In this case, add the total of your annual insurance and tax dues and divide by 12. This is the amount you need to set aside every month.

Seek help if you ever run into financial trouble

If you run into financial trouble and foresee having difficulty making your mortgage payments, seek help as soon as possible. The sooner you reach out for assistance, the more options you will have to correct your situation. Contact a HUD-approved housing counseling agency if you need help with your mortgage.

If credit card bills are causing your financial distress, credit counseling may be able to help you. Springboard has both housing and credit counselors available to help you at no charge.

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Special Homeownership Resources

The loan closing, or settlement, is the final step in the home purchase process. The seller may not have to attend, but the buyer, a closing agent, and real estate agent will meet to finalize the process.

The closing agent may be someone who works for your lender, or a title company. Your lender may also hire an attorney to handle the closing.

You will have to pay any money you owe at this point, including closing costs, taxes, etc. This is your last chance to resolve any outstanding issues or disputes. Once the loan is closed, everything is set in stone and the home is your responsibility.

Your lender will have provided a “good faith estimate” which should give you an accurate amount that you need to bring to cover all of your costs.

You’ll sign many documents at the closing, which the closing agent should go over with you. When you’re done, you’ll be given a copy of all of these documents. Keep them somewhere safe, as you may need them if you sell the home in the future, or for tax purposes.

When the closing is complete, the seller will be given a check, and you will be given the keys to your new home.

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Special Homeownership Resources

Title Insurance

One of the fees you’ll pay at the closing of your home loan is for title insurance. This insurance primarily protects the lender in case there are problems with liens or title disputes that affect the transfer of ownership. Usually the lender arranges for title insurance and the fees are paid by the home buyer, but you do have the right to choose your own title insurance company. In fact, it is illegal for mortgage lenders to require you to use a specific title insurance company when granting a loan.

Natural Disasters

Depending on where the home you are buying is located, you may need to get specific insurance for natural disasters. If you are buying a home in flood prone areas, you should definitely get flood insurance. Similarly, earthquake coverage is essential for buyers near our headquarters in Southern California. You might also look into insurance for hurricanes, mudslides, or other natural disasters depending you your area.

Homeowners insurance covers fire, theft, personal liability, storm damage, hail, etc. Your lender won’t approve your loan without this insurance, and the payment will be included in your monthly mortgage payment. When choosing a home insurance agency, ask your real estate agent and lender for recommendations, and talk to your auto insurance agent. Many insurance companies offer discounts to customers who get their home and auto coverage from the same company.

Home Warranty

Another optional product is a home warranty. In many cases, the seller will purchase a warranty to make the home more attractive. First-time homebuyers may want to make sure they have a home warranty if they can’t make home repairs themselves. A warranty might cover specific systems, like heating and cooling, appliances, water heater, etc. The warranty is typically inexpensive, but if repairs are needed, the homeowner will have to pay a fee at the time of service.

Most experts advise that home warranties are worth the cost, but like all insurance plans, one hopes they are never needed. If you’re handy with plumbing and/or electrical repairs, and your home appliances are relatively new, you may opt to not get a home warranty if your seller isn’t offering one.

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Special Homeownership Resources

After you’ve agreed with the seller on a price, you should go back to your lender to secure your funding. If you followed our steps, you already got pre-qualified or pre-approved, so this isn’t the first time you’ve met with your lender.

Your loan might be a conventional loan, an FHA loan, or some other government-guaranteed product. Your lender can help you determine what the best loan for you will be, and what kinds of programs you qualify for.

The loan itself will break down into different factors:

The Term: most first-time home loans are 30-year notes. You can also get shorter terms, which will involve higher monthly payments, but will save you a lot of money over the life of the loan.

Interest rate: your rate can be fixed or adjustable; we recommend fixed rate loans, as adjustable rates can create huge problems for you if they go up, and may carry large balloon payments that many first-time home buyers have trouble saving up.

Down payments, closing costs, and application fees: You will need cash to pay for these costs at the time of the loan closing. Sometimes, the seller may pay closing costs to help the deal go through. First-time homebuyer programs usually involve lower down payments.

Before the loan can be finalized, you will have to get a home inspection. Your real estate agent probably has several inspectors they can recommend to you. The inspector can help you find issues you may have overlooked, and these may affect your negotiation. For example, if the inspector determines that the home’s roof needs to be replaced, you can back out of the deal, request that the seller complete the repairs before you purchase the home, or ask for a price reduction that will allow you to afford to complete the repairs yourself.

Your lender will order an appraisal to make sure the property is worth what you are paying. This involves comparing your home to similar properties in the area. Your lender will not loan you more money than the home’s appraised value, so if you are paying more, you will have to make up the difference yourself.

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