You still have time to take advantage of the HARP Refinance Program. HARP has been extended until December 31, 2015. You might benefit this type of mortgage refinance if your property is upside down (you owe more on your home than it is currently worth) or has significantly decreased in value.
UPDATE: The deadline was extended again! Announcement on the harpprogram.org site:
“In an effort to enable more struggling homeowners to take advantage of the Home Affordable Refinance Program ®, we have extended the application deadline of the program to December 31, 2016. HARP ® has also expanded the eligibility criteria for MHA to be able to offer assistance to more struggling homeowners.”
What is the HARP Refinance Program?
The government calls it HARP, which stands for Home Affordable Refinance Program. It was started in April 2009 for homeowners who’s mortgages are backed by either Fannie Mae or Freddie Mac. A HARP refinance program mortgage allows homeowners to refinance into low mortgage interest rates in situations where their property value has fallen so they no longer qualify under traditional refinancing criteria.
HARP refinance program is also known by several other names:
- Making Homes Affordable
- The Obama Refi
- A Better Bargain For U.S. Homeowners
- DU Refi Plus, and
- Relief Refinance
What HARP Is NOT
- HARP is not the same as the White House’s A Better Bargain for Responsible Homeowners program. The “A Better Bargain” program is the White House’s recommended set of mortgage market reforms.
- HARP refinance program is the not same thing as an FHA Streamline Refinance. The programs have similarities, but the FHA Streamline Refinances are performed through the FHA. HARP is a program for mortgages backed by Fannie Mae and Freddie Mac only. If your FHA-backed mortgage is underwater, use the FHA Streamline Refinance program instead of HARP.
- HARP the not same thing as the USDA Streamline Refinance program, which homeowners should use for USDA backed mortgages that are underwater.
- HARP the not same thing as the VA IRRRL program. If your home is underwater and your mortgage backed by the VA, homeowners should apply for the VA IRRRL program.
- HARP is not a loan reduction, loan forgiveness or foreclosure avoidance program. HARP refinances your current loan balance and will not reduce the amount you owe.
Eligibility To Qualify For HARP Refinance Program
Although the program is fairly liberal, there are certain strict requirements to qualify.
1. Fannie Mae or Freddie Mac backed loan
Although it’s just a pre-qualifier, to find out if your loan must be backed by Fannie Mae or Freddie Mac, call or use their online loan lookup tools:
1-800-7FANNIE (8am to 8pm EST)
1-800-FREDDIE (8am to 8pm EST)
If your underwater mortgage is backed by Fannie Mae or Freddie Mac, make a note of which one it is before contacting a HARP lender. Now, consider the other criteria:
2. Eligibility Dates
The mortgage you want to rewrite under the HARP refinance program must have a note date prior to June 1, 2009 (no later than May 31, 2009). There are no exceptions, even by one day. The HARP refinance mortgage must be completed and closed no later than December 31, 2015.
3. Afford The Payments
Although there are no income requirements (you are not required to be employed nor are there maximum income limits), you must be able to afford the new, lower payment. Payments on the new loan must be more affordable or more stable than the current loan. The HARP refinance program has no minimum credit score requirements either, but you must qualify based on traditional underwriting standards. These are not “bad credit” loans, per se.
4. Loan To Value Ratio
To refinance in to a fixed rate mortgage, the maximum LTV (Loan to Value Ratio) cap has been removed. So long as your LTV remains above 80%, you should remain HARP-eligible. If your property appreciates and the LTV falls below 80%, lenders might not be willing to refinance your home under the HARP refinance program.
We can’t think of a good reason for refinancing into an ARM (adjustable rate mortgage), but if you do, under the HARP refinance program the maximum LTV is set at 105%. For example, if the value of your property is $100,000, the maximum loan you can have with an ARM is $105,000.
5. On-Time Payments
To qualify for a HARP refinance, your payments must be current and your mortgage up to date. Your home loan must have been paid on-time for the prior 6 months, and on-time for at least 11 of the most recent 12 months. In other words, during the previous 12 months, you are allowed only one late payment.
6. Only One HARP Loan
You may not have previously used the HARP refinance program for this mortgage. Only one HARP refinance per mortgage is allowed. You can refinance investment property or a vacation property with HARP, if the other qualifications are met. You cannot consolidate other loans into a HARP refinance loan.
7. Conforming Loan Limits
So how much can you refinance? HARP loans are based on your area’s conforming loan limits. In most cities, the conforming loan limit is $417,000. In some high real estate value cities, however, conforming loan limits are as high at $625,500. You will have to check the conforming loan limits in your area when you shop around for a HARP lender.
Shopping For A HARP Lender
There are more technicalities, but the foregoing covers the most basic eligibility requirements for the HARP refinance program. In most respects, HARP is pretty much just like any other mortgage. Closing costs will be similar. (Ask your loan officer about a zero-cost HARP refinance.)
And just like any other mortgage — you’ll want to shop around for the best HARP mortgage program rates and service. Because HARP is a “specialty loan” product, you may want to limit your shopping with reputable lenders that know how to specifically handle HARP loans.
Not all banks participate in the HARP program. If your bank won’t help you, or if you are not satisfied with their HARP interest rates, fees or answers, try a different lender. HARP interest rates and closing costs vary from lender to lender. You can do HARP with any participating mortgage lender. It’s a specialty loan program, so you’re better off dealing with a lender who knows the ropes.
In conclusion, determine if your mortgage is backed by Fannie Mae or Freddie Mac. Make sure the note was written prior to June 1, 2009. If you’re underwater on your conforming, conventional mortgage, and meet these two absolute criteria, you may be eligible to get a loan under the HARP refinance program without paying down principal and without having to pay mortgage insurance (PMI).
Find one or more knowledgeable HARP lenders and compare the best rates. Zillow claims to be the only mortgage marketplace on the web and mobile to offer HARP-specific loan quotes. More HARP information can be found on Zillow’s website at: