House prices are rising in the United States. This is simply because of the strong economy, the low unemployment rate, slightly better wages, and the demand of housing from foreigners. The historic low interest rates have also contributed to the surge in housing prices. The government has done a few things to make the housing industry affordable to many people. In this article, we will look at some of these programs and how you can use them to buy a house.

HARP Program

In 2009, following the global financial crisis, congress passed the Home Affordable Refinance Program (HARP) to help underwater refinance with lower rates. This helped them afford homes at a time when the economy was going through challenges. The program, which was modified severally in over ten years, helped people refinance up to 125% of the value of their homes without insurance. However, the program ended in 2018, when the demand for those refinancing slowed down.

HARP Alternatives

Today, it is not possible to access HARP because it expired in 2018. Still, there are alternatives that you can use to finance your house purchase.

The first alternative to HARP is the High Loan-to-Value Refinance option that is offered by Fannie Mae. This option offers refinance opportunities to borrowers that have Fannie Mae mortgages. The borrowers eligible have a history of paying their payments on time. However, these borrowers have an LTV ratio for a mortgage that is bigger than the maximum allowed. The borrowers using this facility benefit in four main ways.

They reduce the monthly principle and interest payments. This is an essential thing at a time when most Americans are living paycheck to paycheck. They also have lower interest rates, shorter amortization term, an a more stable mortgage product.

To qualify for the high loan-to-value program, you need to pass a number of qualifications. First, as mentioned, you need to have a Fannie Mae mortgage. Second, you must have a good track record paying back your mortgage. In this, you need to have no 30-day delinquencies in the past 6 months and no delinquencies that are bigger than 30 days. In addition, the mortgage that you are refinancing must not have been previously delivered as a Fannie Mae DU Refi Plus or Refi Plus mortgage. Finally, you must have at least 15 months between the Note Date of the mortgage that you want to refinance and the Note Date of the high LTV refi mortgage. You can check whether you qualify for the program using this link. The table below shows the minimum LTV ratios.

The second option available to you is the Enhanced Relief Refinance Mortgage that is offered by Freddie Mac. This product provides opportunities to borrowers who have mortgages with the company and those who are making timely payments but are unable to take advantage of the no-cash-out refinance offering. They are unable to do this because the new mortgage is more than the maximum LTV limit. To qualify for this relief program, you need to meet a certain criterion.

First, you need to have interest in reducing your principal and interest payments. Second, you want to reduce the monthly principal and interest on your First Lien Mortgage. Finally, you want to refinance into a more sustainable mortgage that promotes long-term home ownership. Some of the mortgage products that are available are convectional 15-, 20-, and 30- year mortgages. The table below shows the minimum LTV ratios for this program.

Final Thoughts

Home ownership is the ultimate American dream. While buying a house is always a difficult thing, these two options that are backed by the government can help you accelerate your dream of owning a home. Before you enroll, it is essential that you take your time to discuss this with a qualified financial advisor who has been in the industry for many years.

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