Home Affordable Refinance Program (HARP)
Although the housing market is constantly increasingly there still are numerous homeowners that have little or no equity in their homes as the value of their property has severely declined during the recent housing crisis.
The Home Affordable Refinance Program also known as HARP has been designed to help homeowners who are current on their mortgage payments to benefit of lower rates.
The HARP mortgage is a home loan refinance program launched in March 2009. The program gives homeowners whose homes have lost value the possibility to refinance to smaller, current mortgage rates without incurring new mortgage insurance and without taking into consideration their loan-to-value ratio (LTV). The Home Affordable Refinance Program has been extended twice since its implementation and was scheduled to end at the end of this year, however it will be available to homeowners until September 2017
HARP is known by several names, including:
- Obama Government Refinance Program
- Fannie Mae DU Refi Plus
- Freddie Mac Open Access
- Refinance for Underwater Mortgages
- Upside Down Refinance
HARP qualifying standards are relatively straightforward; if you meet the following criteria, you could be eligible for a HARP refinance:
- If you owe as much or more than your house is currently worth.
- If your loan is owned or backed by Fannie Mae or Freddie Mac.
- If your mortgage is upside down or if the current loan-to-value ratio is greater than 80%.
- If you are current on your mortgage payments. No 30-day+ late payments in the last 6 months and no more than one late payment in the last year.
- If your home is your primary residence, second home, or investment property.
- If your mortgage was originated prior to June 1, 2009.
You can visit HARP.gov
for more details regarding the eligibility.
Wondering if your loan is owned by Fannie Mae or Freddie Mac?
What Are the Advantages of HARP 2.0?
- No equity required. You can use HARP to refinance to today's mortgage rates without incurring new mortgage insurance.
- No appraisal required - Getting an appraisal on your property before you refinance is always a hassle as well as an expense. Luckily, the HARP 2.0 program allows anyone with a Fannie or Freddie mortgage to refinance their loan regardless of their property’s value.
- No mortgage insurance - If your existing mortgage has a private mortgage insurance, then you will need the same amount of insurance coverage for a HARP refinance. However if your existing loan does not have private mortgage insurance, it will not be required as part of a refinance under HARP.
- Reduced documentation
- Flexible underwriting guidelines – The Home Affordable Refinance Program is more lenient as it does not into account the borrower’s credit score or loan-to-value ratio in the approval process.
- Subordination of 2nd mortgage - You will be able to combine a 1st and 2nd mortgage and you will be able to cash out with a Home Affordable Refinance Program (HARP). Therefore, you are still able to refinance the 1st mortgage if it meets the HARP qualifying guidelines; however the 2nd mortgage will have to get re-subordinated. The other lender has to agree to cooperate with the streamlined and expedited subordination process.
- Lowerclosing costs than other loans – You might have to pay closing costs; however the amount due varies by state and size of your loan. Closing costs might be rolled into your new loan so you wouldn't have to pay them out of pocket at closing.
- Build equity faster by shortening your term – You have the possibility to shorten the mortgage term. This way you will be able to repay the amount you owe much faster; and to take advantage of the small interest rates that shorter term mortgages usually offer.
On average, homeowners that have refinanced their loans through HARP save over $250 per month on their mortgage payments. More than 3.4 million homeowners have refinanced their mortgages under the Home Affordable Refinance Program since its beginning.
If you have additional questions or need direct assistance, don't hesitate to contact your mortgage broker. These counselings experts can help you understand your options, design a tailor made plan to suit your individual requirements.