The Home Affordable Refinance Program, also known as HARP for short, was approved in 2009 by the Obama administration. This was also originally known as the MyRefi Plan by the White House. The program was created to help borrowers with loans that exceeded the current market value of their home due to the real estate slump during the economic recession.
Since its inception, the HARP program has gone through several changes in an effort to make it more affordable and easier to qualify for homeowners. Where homeowners could only refinance up to 125% of their loan-to-value (LTV) under the initial rules, those restrictions have now been lifted to help more people.
See if you qualify for a HARP loan, fill out our quick 1-minute form to have a Mortgage Advisor contact you.
Extra Benefits of a HARP Loan
Under the initial iteration of HARP, you wouldn’t qualify if you had more than 25% negative equity in the property. This prevented millions of Americans who needed help but did not qualify. Once HARP 2.0 was put in place, this negative equity cap was removed and millions of more people were able to use the program. If you’ve been struggling, but still meeting your monthly financial obligations through an upside-down loan, you can still qualify for this program and get yourself into a much more beneficial circumstance.
One of the great benefits of HARP is that it allows your lender to reduce the principal on the loan to match the current market value of the home. This can get rid of a significant amount of negative equity you may have had in the property and will also lower your monthly payments. While going through this process, you may also see an improvement in your current interest rate, which will save you even more. You can also change your loan repayment schedule to one that meets your needs, including 15, 20, or 30-year repayment plans.
In order to continue to simplify this process, the HARP plan has streamlined the ability to transfer Private Mortgage Insurance (PMI), which historically has been difficult to do between different lenders. This means you can refinance through a HARP lender of your choice and don’t have to be stuck with your current lender. Contact one of our Mortgage Advisors today to find a HARP lender that is the best fit for your situation.
HARP also has put into place caps on closing costs and other associated fees, keeping your total expenses for this refinance at a reasonable and affordable level. Some of the fees, such as credit and appraisals, can be eliminated entirely under this program, saving you thousands of dollars. The program does this by looking at nearby market sales and trends and evaluating your home based on comparable situations.
For those with investment properties or a second home, you’re in luck. While these properties didn’t qualify under the initial iteration of HARP, with HARP 2.0, you have the option to refinance multiple mortgages. The process is slightly different than for a primary residence. It costs a little more and will take longer to qualify, but it is worth discussing the possibility with a qualified lender.
Qualification Requirements for HARP 2.0:
- You must have an LTV of at least 80% or more.
- You must be current on all your payments.
- You may have no late payments in the last six months and no more than one in the previous year.
- Your current loan must be owned by either Freddie Mac of Fannie Mae.
If you meet the requirements for the HARP program, it is definitely worth talking to a certified lender to see what your options are and how to move forward. You can find the best lender for your situation by talking to one of our Mortgage Advisors. It is time to get back into a healthy mortgage situation and that is your first step! See if you qualify for a HARP loan, fill out our quick 1-minute form to have a Mortgage Advisor contact you.