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By Sean A. Kelly

Back in 2009 when the economy started sliding indefinitely, my high school classmate Ralph started to face issues with his monthly mortgage loan repayment. This was primarily caused by the fact that Ralph lost his day-job as his company started retrenching that year, and left him precariously positioned in terms of financial stability. Without his main source of income, Ralph was forced to look for alternative jobs, most of which did not pay regularly. As a result, his mortgage loan started to suffer as he missed several payments in a stretch. He faced the additional problem of owning a home that did not appreciate in terms of value. Thus he owned no equity in his home at that time, and could not apply for a home equity loan. He was at a loss of how to overcome his mortgage issue, and was exploring the option of conventional home refinancing when the government introduced the Making Home Affordable (MHA) program. The MHA program had two main components to help ailing homeowners cope with their monthly mortgage loan repayments, the Home Affordable Refinance Program (HARP) as well as the Home Affordable Modification Program (HAMP). This introduction came in a timely manner for Ralph, who opted for the HARP mortgage program immediately. The HARP mortgage program was one that allows homeowners to refinance their home even if the owners do not possess any equity in the home, and this suited Ralph perfectly.

Under the HARP guidelines, you are eligible to apply for this program if your home’s original value does not exceed 125% of your home’s market value at the time of application. The value of Ralph’s home at the time of application was approximately equal to what he paid for initially for the property. Thus he qualified comfortably for the program. After going through the application process, Ralph succeeded in refinancing his home at a lower interest rate, and managed to lower his monthly repayment amount by almost 30%. This in turn helped him cope better with the monthly mortgage loan payments, and has helped him retain his home and recover his financial stability slowly but surely. Today Ralph has managed to obtain a new day job, and has returned to his normal cheerful self with his finances back in order. And without the assistance of the HARP mortgage program, this definitely would not have been possible!

The HARP government home mortgage program does not have a minimum credit score requirement. Thus you could still apply for this program if you have low credit scores and are unable to obtain conventional home refinancing packages with attractive interest rates. The same could be said about the HAMP. This program also allows those with bad credit scores to modify their mortgage loans successfully. By opting for the HAMP, you could seek to alter your mortgage loan by either increasing the duration of your loan deal, or seeking a lower interest rate for the mortgage loan. Either way, you would end up lowering your monthly repayment amount to your lender, resulting in you being more comfortable in servicing your mortgage loan.

Remember that even if your property’s value has dropped compared to the price that you paid for it, you could still successfully refinance the property. And by opting for government mortgages refinancing plans such as the HARP, you could save further by avoiding excessive closing costs or processing fees. This makes this option even more attractive to consider if you are currently struggling to service your mortgage loan. Take your time and consider your options carefully before settling on the best mortgage refinancing option for you and your home. All the best!

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