A mortgage-refinancing program, Home Affordable Refinance Program (HARP or ) is offered to homeowners who have an outstanding loan balance on a house that is less than the value of the home itself. HARP was put forward in 2009 by the Federal Housing Finance Agency (FHFA) to make homeownership affordable and deal with the housing downturn strategically. The refinancing program is beneficial for homeowners who are amidst a financial crisis and are thus struggling to pay their mortgage.
If an applicant has a good payment history, they should consider refinancing through HARP. A point to note here is that their current mortgage should not incur any extra interest due to overdue payments and if they owe more than what their house is worth.
Here are some advantages of refinancing your home loan through HARP:
- One of the main advantages of using HARP is that it requires minimum paperwork when compared with other traditional refinancing options, easing the application process
- It also allows you to transfer your current mortgage to an adjustable-rate mortgage in a fixed-rate loan, which will eventually reduce the mortgage rate and shorten the loan term
- You can also bundle costs into a new home loan using HARP. Bundling costs refer to combining various elements in your current loan costs and combining it into a single mortgage
- You can apply for HARP to lower the mortgage rate incurred against your home loan.
- The refinancing program can help you shorten the loan term
- HARP does not require the applicants to get an appraisal or have a loan underwriting from their previous lenders
- The applicant has an increased chance of getting their loan refinanced as HARP does not have underwater limits
Here are the eligibility requirements if you are planning to refinance your current mortgage through HARP:
- You should not have more than one late payment instances in an entire year on your current mortgage.
- You are also allowed to refinance only those homes through HARP that are their primary residence, a single-unit second home or an investment property.
- The previous loan of the applicant should be owned by Freddie Mac or Fannie May and should have been originated on or before May 31, 2009.
- The current mortgage of the applicant should have a loan-to-value (LTV) ratio that is greater than 80 percent. LTV is the ratio used by financial organizations to evaluate the risk assessment before they can approve a mortgage
You can find tools to calculate your LTV on HARP’s loan look-up tools that are available on their official website.
HARP’s rehashed eligibility criteria can increase your chances of getting a refinancing program; however, you cannot enroll to refinance your home through HARP more than once.
There are significant changes made to HARP since it was first introduced. Property appraisal requirements were waived under certain circumstances and risk fees for borrowers with shorter amortization (spreading payments over multiple periods) were eliminated.
HARP lets you acquire mortgages with competitive interest rates and lets you to switch from adjustable to fixed-rate mortgages without requiring a minimum credit score.
The applicants will go through a series of applications approval and closing process and application approval on their current mortgage, once they qualify to refinance their home through HARP.
Mentioned below are steps that will help you determine if HARP meets your specific needs:
The applicant needs to gather all their financial information such as mortgage statements and income details.
Once the financial details have been gathered, the applicants are required to contact their current mortgage company if they have an approved lender that can help them refinance their current mortgage. The lender might already have their current loan file since their loan was owned by Freddie Mac and Fannie May. However, the applicants might be asked to provide necessary information to verify their current source of income.
Once the applicant has gathered all the information from their current mortgage company, they will be required to contact a HARP lender through a list of HARP-approved lenders that is available on the official website. These lenders can help them determine if they are eligible for HARP.
Once approved, the applicants are required to go through the application and closing process.
If a lender says that the applicant is not eligible for a refinance, they can speak to a HARP specialist if there are other ways that they can be eligible for a HARP refinance program.
There are many fraudulent schemes that are operated under the name of HARP, which could cost you thousands of dollars or even your home. Be aware of anyone who asks you to pay a fee in exchange for counseling services through HARP. Make sure that you don’t sign over the deed of your property to any organization unless it is working directly with the mortgage company that is helping you reduce your debt.