The Home Affordable Refinance Program (HARP®) stands by its name of helping homeowners refinance into more affordable loans with a simpler and faster approach.
Since 2009, HARP® has helped millions of underwater mortgage borrowers whose homes have little equity or a loan balance that exceeds the current value of the property. HARP® enables many homeowners facing foreclosure to refinance their loans and secure better rates.
Whether your home has little or no equity, you may be able to refinance under the HARP® program to:
- Reduce your interest rate.
- Switch from an adjustable rate mortgage (ARM) to a fixedrate mortgage (FRM).
- Lower your monthly payment.
- Opt for a shorter loan term.
- Benefit from lower closing costs.
Over the years, HARP® has been modified to simplify its guidelines, e.g. removing LTV ceiling, waiving property appraisals in some cases, modifying fees, and requiring less paperwork, among other things. This is so more loans can be refinanced through December 31, 2016, the program’s deadline.
Fannie/Freddie: To be eligible for HARP®, your mortgage must be owned or backed by Fannie Mae or Freddie Mac. Call 8007FANNIE and/or 800FREDDIE to determine if the loan serviced by your lender is guaranteed by either governmentsponsored entity (GSE).
If your loan is not owned by either Fannie Mae or Freddie Mac, you are not eligible for HARP®. BUT you can still refinance your loan under programs or loans insured by FHA, VA, and USDA.
Delinquencies: Your mortgage loan must be current, having no delinquencies during the past six months and a maximum of one late payment in the year.
LTV:HARP® sets the current loantovalue ratio to be more than 80% and you can calculate your LTV here. If you’ve been turned down once because you owed over 105% of your home value, you can try again as HARP® now accepts borrowers whose loan balance exceeds the home value, subject to further guidelines.
Origination date: Your mortgage loan should have an origination date on or before May 31, 2009.
Eligible properties: HARP® refinancing is applicable to (a) primary residence, (b) oneunit second home; and (c) one to fourunit investment property.
Refinancing your loan usually entails these steps outlined by HARP®. Step one: Ready your financial and loan information, such as mortgage statements that may include information on your second mortgage, and income details that may include income tax returns or pay stubs.
Step two: Call your mortgage lender to determine if it is an approved lender with HARP®. Notwithstanding your loan status with them, you will be required to produce the necessary documents to verify your current income source. Or, get in touch with a HARP® lender approved with Fannie Mae or Freddie Mac and ask them if you qualify for a refinancing under HARP®. If one lender says you don’t qualify for HARP®, you can always seek other lenders’ opinion.
Step three: Upon the lender’s determination that you qualify, you will go through the process of applying and having the loan approved and closed with your lender’s help.
Have You Talked to a HARP® Lender?
For all these, HARP® represents a worthwhile and good opportunity for you or other borrowers who want to effectively lower their mortgage rates, without requiring additional or new mortgage insurance. You better act quickly though because the program only runs through December 2016.
You can connect with a HARP® lender now to find out if you are eligible for HARP® refinancing and other details you might need to increase your chances of qualifying. Click the orange button today!
Justin McHood is America's Mortgage Commentator and has been providing expert mortgage analysis for over 10 years.