Understanding the Home Affordable Refinance Program (HARP) if You are Self-Employed

The Home Affordable Refinance Program or HARP is part of a new federal government initiative called Making Home Affordable that provides billions of dollars for mortgage assistance. This program aims to help homeowners deal with mortgage challenges involving facing foreclosure or other similar situations. This program is available to property owners who are either self-employed or who work for a conventional employer. Certain unique requirements may apply to self-employed homeowners who want to participate in the Home Affordable Refinance Program.

General Provisions of the Home Affordable Refinance Program

As mentioned above, conventionally employed or self-employed parties can participate in the Home Affordable Refinance Program under certain guidelines:

The major requirement for HARP is that the loans and properties under consideration must include financing by government companies Fannie Mae and Freddie Mac. The “Fannie and Freddy” requirement shows how the government program only applies to loans made through government assisted processes, rather than those which were completely privately brokered.

The applicant must be the owner an occupant of a home with certain size requirements. Government documents stipulate a “one to four unit” property.

There are also requirements on being current with mortgage payments. Home Affordable Refinance Program participation requires a maximum of 30 days lateness on a mortgage payment.

In addition, guidelines on debt ceilings apply. Specifically, the borrower’s debt should be below 125% of total market value of the property.

Provisions for the Self-Employed

As with other mortgage and loan processes, self-employed individuals will have to participate in additional financial record requirements to be eligible for the Home Affordable Refinance Program.

Applicants who are self-employed have to provide a “true picture” of their finances. This is harder when the individual does not work for a company. Employees have pay stubs that can easily establish their annual income, whether it is hourly or salaried. By contrast, self-employed applicants have to show business income through tax filings and similar documents. According to their situation, these advocates may need to show annual filings, 1099 forms, or other proofs of income or assets in order to participate in HARP.

Government sources recommend that self-employed individuals utilize the service of their tax preparer or CPA (Certified Professional Accountant ) to provide 2 years of financial records.

More on the Home Affordable Refinance Program

Home Affordable Refinance Program participation may include additional record-keeping requests or provisions that limit eligibility. Individual loan modification or refinancing seekers should research the program through a professional loan assistance company unless they are independently able to pursue this program through other channels. Borrowers should also look at any fees or other costs of refinancing or otherwise changing a mortgage or loan agreement.

A closer look at HARP and related government programs shows that these programs are made for all types of borrowers with radically different income situations, focusing on individuals and families looking to avoid foreclosure by changing loan agreements to fit their current budgets with attention to general economic realities.