The Home Affordable Refinance Program® (HARP®)’s success is measured by its numbers: 3.5 million homeowners with little to no equity were able to refinance and save $35 billion from reduced rates and payments
But the government wants more — they desire for all of the thousands of still qualified homeowners to take advantage of this amazing refinance program before it expires on December 31, 2018.
HARP®: A Post-Crisis Refinance Story
A program introduced in March 2009, HARP® addressed the issues facing homeowners who, despite being current on their mortgages owned by Fannie Mae or Freddie Mac, could not refinance because their homes have fallen in value as a result of the housing crisis.
Through HARP®, eligible homeowners were able to (i) lower their existing rate, (ii) shorten or prolong their mortgage term, (iii) transfer their existing mortgage insurance to their new loan, or (iv) refinance without adding new mortgage insurance, despite the home’s current value.
The program has been enhanced over the years to increase eligibility and help more struggling Americans. For instance, eliminating the previous 125% loan-to-value ratio limit and entirely doing away with property appraisals in certain cases helped encourage the huge spike in participation during the middle part of the decade.
Millions of Refinances, Billions in Savings
The second quarter figures for HARP® are out and the numbers are astounding. Here’s proof that the program is a great success:
- 3,470,804 total loans made since program inception
- Average borrower rate decrease is an amazing 1.66%
- Average borrower’s monthly savings of $200
- Total homeowner savings of over $35 Billion
At the peak, 27% of all conforming refinances were through the program (2Q12). There are still thousands of homeowners utilizing HARP® each month.
Participation volume and percentages are still nearly double the national average in Alabama, Arizona, Connecticut, California, Delaware, Florida, Georgia, Illinois, Maryland, Michigan, North Carolina, Nevada, New Jersey New Mexico, New York, Ohio, Pennsylvania, Rhode Island and Virginia
These gains arguably make HARP® the most successful housing refinance program in history.
HARP® Extended Through 2018 for More Homeowners
Since there are still thousands of homeowners who can qualify for HARP®, the program has been extended for the fourth time through December 31, 2018.
As of May 2017, 143,000 homeowners can benefit from refinancing through this affordable refinance program.
These borrowers, according to the agency, meet the following standards required by the program:
- Have a remaining balance of $50,000 or more on their loan
- Have a remaining term on more than 10 years on their loan
- Have a mortgage rate that is 1.5% higher than the current market rates
Its enhancements plus Fannie Mae’s and Freddie Mac’s easing of guidelines could further increase the pool of homeowners eligible for a HARP® refinance.
Refinancing Beyond HARP®
For borrowers whose lack of or limited equity have kept them from refinancing, HARP® may very well be their only option.
Through June 2017, 6% of all HARP® loans had a loan-to-value ratio greater than 125%.
Refinancing through the program also helps borrowers build equity faster by shortening their loan terms. Twenty-five percent of 2Q17 HARP® refinances for underwater mortgages were for shorter-term loans, 15- and 20-year mortgages.
HARP® is not, however, a cash-out refinance program. It only allows $200 cash-back at close. If you are looking for cash out of your home, you can try the enhanced cash-out refinance programs.
Indeed, HARP®’s last extension is in preparation of new high LTV programs that will replace it in 2018. These streamlined refinance programs can be used more than once.
HARP®, it’s fueled by success stories of millions of homeowners who have benefited from its leniency, thus reducing their mortgage burden by thousands every year. You, too, can apply for one.