The chance to use HARP to refinance your Fannie Mae or Freddie Mac loan is coming to an end very soon. The program ends December 31, 2018. This does leave plenty of time for you to still take advantage of the program if you wish to do so.
What is HARP?
HARP was designed to help homeowners that owe as much as their home is worth or even more to refinance. Homeowners can refinance without adding mortgage insurance to their loan. However, if they already have mortgage insurance on their current loan, they will continue to pay the insurance.
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The program is meant for borrowers that owe more than 80% of their home’s value on their mortgage and that have no delinquencies on their mortgage in the last 12 months. This program helps borrowers that would otherwise be ineligible to refinance, take advantage of today’s great rates.
How HARP Helps
If you are a good borrower, meaning you pay your mortgage payments on time, but you are stuck with a high LTV due to the housing crisis, HARP can help you:
- Secure a lower interest rate which translates into a lower monthly payment, helping you to save money every month and over the term of the loan
- Refinance into a fixed rate from a risky ARM rate, which can help you avoid the costly adjustments an ARM rate can cause.
- Build equity in your home faster, helping you to get out from the underwater status you’ve found yourself in thus far.
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The Rules
HARP has fairly relaxed guidelines. First, you must have a loan that is owned by Fannie Mae or Freddie Mac. You can find out if Fannie Mae owns your loan here. You can find out if Freddie Mac owns your loan here.
Once you know you are eligible, you have to prove that you are underwater or at least owe as much as 80% or higher on your loan. The old guidelines allowed a maximum LTV of 125% in order to be eligible. Today, though, that LTV restriction has been removed.
The remainder of the loan approval process works much the same as any other loan. You must prove your credit score, income, and assets. You may have to write a letter stating the hardship you are experiencing with your loan. You may or may not need an appraisal. This requirement will depend on your chosen lender.
Whether or not HARP will receive another extension is up in the air right now. As it stands, the program will end at the end of 2018. If you are keen on refinancing your home and you are underwater or close to it, you should act fast as the process can take as long as three months to complete.
