If you are a homeowner trying to lower your monthly mortgage payment through Obama’s mortgage assistance program you may be trying to decide between the Obama loan modification and the refinance program. This article helps you analyze between the two. HAMP vs HARP – What’s the best choice for you?
Affordable Refinance vs Affordable Modification – The Differences of Obama Mortgage Assistance Programs Explained
What is the difference between HAMP, the Obama modification assistance program, and HARP, the Obama refinance assistance program. This resource explores HAMP vs HARP; the differences, similarities, and key aspects of how they stack up against each other. Both the refinance program and HAMP will lower your mortgage payment
The Key Difference
The Home Affordable Modification Program – HAMP is a modification program which changes the terms of an existing loan. The Home Affordable Refinance Program – HARP is a refinance program which replaces one loan with a totally new loan.
Points of Key Advantages
There is no way to determine definitively whether one program is better than the other. Which program is more beneficial depends on the individual applicant or borrower in need of assistance.
To help borrowers in search of mortgage assistance gain some perspective on these two programs we have highlighted some key advantages that one program has over the other in certain instances. We also have a great resource outlining a survey that will help borrowers determine whether to choose HAMP or HARP.
Key Points Favoring HAMP over HARP
- HAMP is able to accommodate borrowers in mortgage default. In contrast HARP is only for borrowers still current on their monthly mortgage payments.
- HAMP does not require the borrower to have a government backed or owned mortgage.
- HAMP has a financial lender incentive built into the program that encourages lenders to consider borrowers for the program.
- HAMP has helped more borrowers than HARP.
Key Points Favoring HARP over HAMP
- HARP assistance does not require the applicant to be in immediate distress.
- HARP will not have the same severity of consequences on an applicants credit score as will HAMP.
- HARP does not throw the applicant into default.
Remember that both are great programs for homeowners who need to lower their monthly mortgage payment and make home affordable.
If you still need some guidance try following this step by step guide.
Step by step – Home Affordable Modification or Refinance
1) Get Familiar with the Basics of Both Programs
The first thing to do is ensure that you understand exactly what the HARP program is as well as understanding the HAMP program. This may seem like a “no duh” but never the less it is absolutely essential.
Obama Loan Modification
- “HAMP” is the “Home Affordable Modification Program”. This program allows the homeowner to restructure the current mortgage terms to a level that is affordable for the homeowner. This is done through a loss mitigation process known as loan modification. By adjusting the interest rate, the term (or life) of the mortgage, the balance of the mortgage, or some other aspect of them mortgage agreement you obtain a more affordable payment for the homeowner.
- “HARP” is the “Home Affordable Refinance Program”. This mortgage assistance program allows homeowners to refinance their mortgage to a more competitive and affordable rate. Some times the balance of the mortgage can even be dropped though don’t count on that.
2) Ask Your Self some Key Questions
- Do you have a Fannie or Freddie backed mortgage loan?
If no then you will not be able to qualify for HARP. Only HAMP may be able to help you.
- Have you defaulted on your mortgage? Our you in foreclosure?
A yes to either of these questions lands you a HAMP application because the refinance program does not accept applicants who are not current on their mortgage payments
3) Refinance If you Can
If you think that you are eligible for the refinance portion of the Make Home Affordable Plan then that is most likely the best choice. However it is still unlikely that yo will be able to obtain a mortgage refinance loan if you go by application history so you should still familiarize yourself with HAMP, the Obama Loan Modification Program
4) Detailed Qualification Research
Next, Check out the qualifications of the program that you favor. If you meet the terms great, if you do not meet the terms that’s OK just go to the next program and see if you qualify for that mortgage assistance plan.
If you don’t know or if you don’t qualify for either then make sure you at least call a housing counselor. There are many other ways to stop foreclosure and or obtain mortgage assistance.