What is the HARP Program?
When you have little equity in your home, or owe as much or more on your mortgage than your home is worth, it can be difficult to find a lender willing to help you refinance. But for borrowers who have remained current on their mortgages, and have loans owned by Fannie Mae or Freddie Mac, there is hope. It’s called HARP.
Introduced in March 2009, HARP enables borrowers with little or no equity to refinance into more affordable mortgages without new or additional mortgage insurance. HARP targets borrowers with loan-to-value (LTV) ratios equal to or greater than 80 percent and who have limited delinquencies over the 12 months prior to refinancing.
Significant changes have been made to HARP since the program was first introduced. For example, in 2011 the LTV ceiling was removed, property appraisal requirements were waived in certain circumstances, certain risk fees for borrowers selecting shorter amortization terms were eliminated, and certain representations and warranties were waived. In 2013, the eligibility date was changed from the date the loan was acquired by Fannie Mae or Freddie Mac to the date on the note, increasing the pool of eligible borrowers.
Through HARP, you can get a lower interest rate (which means less out-of-pocket costs each month), get a shorter loan term, or change from an adjustable to fixed-rate mortgage. There’s no minimum credit score needed, either.
And now that HARP guidelines are simpler, even people who were formerly turned down may now be eligible for HARP refinancing.
How can HARP help me?
If you are current on your mortgage; have a mortgage that is owned by Fannie Mae or Freddie Mac, and owe as much or more than your home is currently worth, you may be eligible for HARP refinancing. That can mean significant savings by:
- Lowering your monthly payment
- Reducing your interest rate
- Securing a fixed-rate mortgage that won’t change over time
- Building equity faster—shorter term options may be available
- Lower closing costs because an appraisal is not usually required
HARP program includes:
No underwater limits
- Borrowers will now be able to refinance regardless of how far their homes have fallen in value. Previous loan-to-value limits were set at 125 percent.
- No appraisals or underwriting
Most homeowners will not have to get an appraisal or have their loan underwritten, making their refinance process smoother and faster.
- Modified fees
Certain risk-based fees for borrowers who refinance into shorter-term loans have been reduced.
- Less paperwork
Lenders now need less paperwork for income verification, and have the option of qualifying a borrower by documenting that the borrower has at least 12 months of mortgage payments in reserve.
- Program Deadline
The end date to get a HARP refinance is December 31, 2018.