HARP is an acronym that stands for Home Affordable Refinance Program. This unique home refinancing program was developed by the federal government under the Obama administration in 2009. The purpose of HARP was to expand refinancing eligibility to homeowners who were “underwater” in their home loans – in other words, to those who owed more on their mortgage than their home was worth.
Being underwater in a mortgage usually disqualifies a homeowner from refinancing in the traditional method. But through HARP, homeowners who have mortgages through Freddie Mac or Fannie Mae may be able to take advantage of lower interest rates through refinancing, provided all other criteria are met.
HARP has gone through a few changes since its original design. Namely, the loan-to-value maximum was eliminated, making it possible for homeowners to refinance no matter how much their homes decreased in value. Additionally, certain changes in the program made it safer for lenders to offer HARP refinancing. Lenders were given freedom from liability from any issues associated with the borrower’s first mortgage, which helped reduce their legal risks and helped HARP reach more and more borrowers in need.*
Here is a brief overview of the HARP eligibility requirements:
- Your mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
- Your mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
- Your mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
- The current loan-to-value (LTV) ratio must be greater than 80%.
- You must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.
The Benefits of a HARP Refinance:
- Reduce your monthly mortgage payment by locking in a lower interest rate. 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 monthly mortgage payments.
- Work toward building your equity.
- Avoid foreclosure by making your payments more affordable.
You can contact Freddie Mac or Fannie Mae for assistance in determining your eligibility:
*Please note that not all mortgage providers offer HARP refinancing.