The Home Affordable Refinance Program (HARP) was introduced under the federal government’s Making Home Affordable program and was designed to help homeowners refinance into more affordable mortgages even if they have negative equity in their homes. This is known as being “underwater” in a mortgage, and can prevent homeowners from taking advantage of lower mortgage rates through refinancing.
Thanks to HARP, millions of American homeowners across the country have been able to transform their Freddie Mac or Fannie Mae home loans into low-interest mortgages and even avoid foreclosure. The program has undergone a few changes since its inception, and even was granted a two year extension in 2013, making it set to expire at the end of this year. However, HARP was extended yet again this year.
Currently, HARP applications must be submitted no later than December 31, 2016.
It’s always possible for the government to continue to make changes to HARP and the overall Making Home Affordable program, however at this time there doesn’t appear to be any talk about further modifications or another extension. Therefore, if you are eligible for HARP and have not yet taken advantage of the program, you still have a little over a year left to apply.
Qualifying for HARP
In order to qualify for HARP, you must have a mortgage that is owned by Fannie Mae or Freddie Mac. You can ask your mortgage loan professional to find out if your mortgage is owned by one of these two government sponsored enterprises (GSEs), or you can check online through the Making Home Affordable website.
Other eligibility guidelines for HARP include the following:
- The homeowner must be current on his or her mortgage with no payments that are 30+ days late in the last six months, and no more than one 30+ day late payment in the last 12 months.
- The home must be used as the borrower’s primary residence, a 1-unit second home or a 1- to 4-unit investment property.
- The loan being refinanced must have been originated on or before May 31, 2009.
- The current loan-to-value ratio for the homeowner must be greater than 80%.
- If you are unsure about any of these requirements, talk to a trusted mortgage professional and he or she can help you determine your eligibility.
Take a look at the following program benefits to see how HARP can potentially help your situation:
- Refinance your loan into a more affordable mortgage by lowering your interest rate and mortgage payment.
- Switch from an Adjustable Rate Mortgage (ARM) to a Fixed Rate Mortgage with an interest rate that will not change over time.
- Refinance into a shorter term mortgage to help you build equity faster and possibly pay off your loan sooner.
- For more details on the benefits of the HARP program, speak with your mortgage lender.
There is also a good post about the reasons to consider a HARP refinance on Mid America Mortgage’s website which notes…..
“According to Freddie Mac, borrowers who refinanced through HARP in the first half of 2010 saved an average of $125 to $150 a month on their mortgage payments. The larger the loan, and the higher the original interest rate, the bigger the savings – which means HARP refinancing might not be a cost-effective solution for everyone. If you’re only saving $90 a month by refinancing to HARP, it may take a few years to reach the breakeven point (the point at which the amount of money saved is equal to the closing costs).”
You can search for participating HARP lenders on Fannie Mae’s website here.