Home Affordable Refinance Program (HARP)

A HARP mortgage can provide you with relief if you are a homeowner that is struggling to pay your mortgage, due to high mortgage costs or unexpected financial hardships. The HARP mortgage program was established in 2009 as a response to the housing crash, allowing more homeowners to refinance their mortgages and reduce monthly payments.

By providing refinancing options to struggling homeowners, both the Federal Housing Administration (FHA) and United States Department of Housing and Urban Development (HUD) have utilized practices to reduce the number of foreclosures since 2009, alongside other mitigation programs that are provided through the FHA.

By reviewing the HARP eligibility requirements before you submit an application, you can determine whether or not you are eligible for this refinancing program, as HARP has very specific requirements, including requirements for the owner of a borrower’s mortgage. With a bit of knowhow, you can also be better prepared for your application process by learning of the various steps you will need to complete, in order to successfully submit an application.

What is the Home Affordable Refinance Program?

The HARP mortgage program was established in March of 2009, in order to combat the rising number of foreclosures seen throughout the nation, as this sudden and increasing rise in foreclosures not only damaged the economy, but provided an unstable housing market. The idea of HARP, which is not to be confused with HAMP, was to provide homeowners who might have been struggling with mortgage payments the opportunity to obtain refinancing, including homeowners that owed as much, or more, on a mortgage than the home was worth.

With a HARP mortgage, homeowners with little-to-no equity could still refinance a mortgage into a more affordable mortgage. Since the program was first established, significant changes were made in 2011. These changes included reduced eligibility requirements, as the LTV ceiling was removed. In certain circumstances, property appraisal requirements could also be waived. Therefore, if you had previously applied for HARP, and you were denied, you may still find yourself eligible for the program, going forward.

How can a HARP mortgage assist you?

A HARP mortgage can provide you with significant savings, especially if you currently have a mortgage that is as much, or more, than the value of your home. With HARP, you can potentially receive significant savings through:

  • Reduced HARP interest rates.
  • Lowered monthly mortgage payments.
  • Securing a fixed rate mortgage as, with a fixed rate, interest rates will not change over time.
  • Short term options may be available.
  • Lower closing costs, because an appraisal is not generally required.

Who meets HARP eligibility requirements?

By reviewing HARP eligibility requirements, you will be better prepared for your application, as well as gain a better understanding as to whether or not you may qualify for this program. HARP is primarily for borrowers with a loan-to-value (LTV) ratio that is equal to, or greater than, 80 percent, and who have limited delinquencies over the previous 12 months prior to submitting an application. To be eligible for a HARP mortgage, you must also meet the following qualifications:

  • You are current on your mortgage
  • You have not had a 30-day-plus late payment in the past six months, and no more than one in the past 12 months
  • Your home is your primary residence, a one-unit second home or a one- to four-unit investment property
  • Your loan is owned by either Fannie Mae or Freddie Mac.
  • Your loan was established on or before May 31 , 2009
  • Your current loan-to-value ratio is greater than 80 percent

To learn more about HARP eligibility requirements, including how you can determine whether or not your loan is owned by Fannie Mae or Freddie Mac, download our comprehensive guide today.

Understanding HARP Loans Pros and Cons

The home affordable refinance program offers homeowners a number of benefits that can help save money over time, including:

  • Lowered HARP mortgage rates.
  • A shortened loan term.
  • A fixed-rate loan.
  • HARP bundles closing costs in the new refinanced loan.
  • A smoother application process, as less paperwork is required, in comparison to traditional refinancing.
  • No minimum credit score requirement.
  • No minimum debt-to-income ratio requirement.
  • The ability to remove a borrower from an existing loan if the remaining borrower can provide proof of steady payment history, such as in the case of working with divorcing couples.

While a HARP mortgage offers numerous benefits, it is also important to review any potential drawbacks that you may face in order to make an informed decision on whether or not to apply for the program. Potential drawbacks that you may face with HARP include:

  • Your principal balance will not be reduced and, in some cases, it may be higher than it was previously.
  • You cannot refinance a fixed-rate second loan or home equity loan through this program.
  • You may still end up owing more than your home is worth after a few years.

What is the deadline for a HARP mortgage loan?

If interested in HARP mortgage relief, it is very important that you get started, and submit an application prior to the program’s deadline. This program is a temporary one that will end after its expected course. The deadline for HARP is currently Dec. 31, 2018.

How to Apply for a HARP Mortgage Loan

To apply for a HARP mortgage, you need only follow a few basic steps that will help you to get started and complete your program application. As stated previously, HARP eligibility requirements must be met in order to qualify for the program. If you have not done so already, it is important to review these requirements before moving forward.

To apply for the home affordable refinance program, you will need to obtain your basic financial and loan information. This includes your mortgage statements and any additional information about a second mortgage, if applicable. You will also need your income details, and you should have either your paystubs or income tax return on hand.

To apply for the HARP mortgage program, you will need to contacted your mortgage company and ask if the company is an approved HARP lender. This can be a convenient method, as your lender will already have your loan on file. Alternatively, you can contact a HARP lender, directly, in order to see whether or not you qualify for the program.

When applying for a HARP mortgage, if you are ever told that you are ineligible for HARP, you are strongly encouraged to ask additional questions and determine why you may not be eligible. If you have good reason to believe that you are eligible, you can also ask to speak with the HARP specialist, or you can contact a different lender for a second opinion.

You will be able to submit an application, if eligible, through an approved HARP lender. That lender will guide you through the application, approval and closing processes. To learn more about the HARP application process, download our informative guide.