Harp Refinance Program – Making Home Affordable
Editor's Note: This information is accurate and current as of today, . This HARP loan post reflects the current standards for HARP 2.0, and contains information about HARP 3.
What Is The HARP Loan?
The Home Affordable Refinance Program (HARP) is a U.S. government-backed mortgage program for homeowners whose homes have lost value since purchase. The HARP program
was first launched in early-2009 as part of the Making Home Affordable initiative.
Since its inception, HARP has helped more than 3 million U.S. homeowners refinance
to today's low mortgage rates.
The government revamped HARP in 2011 to help reach an even broader set of U.S. homeowners. Dubbed "HARP 2.0", the program's new guidelines made qualifying for the program more simple and, for many, waived the need for a home appraisal as part of a refinance.
The eligibility requirements of the Home Affordable Refinance Program (HARP) are relaxed as compared to a traditional refinance.
Homeowners using the HARP program must have a mortgage currently backed by Fannie Mae or Freddie Mac, and that mortgage must have started no later than May 31, 2009. The majority of U.S. mortgages are backed by Fannie Mae or Freddie Mac.
Note that your loan may have been securitized by Fannie Mae or Freddie Mac even though you send your mortgage payments to a specific mortgage lender. Homeowners whose mortgages pre-date May 31, 2009 are likely to be HARP-eligible.
The Home Affordable Refinance Program is available in all 50 states, and in the District of Columbia. Closing times are quick and mortgage rates are low. The government will not accept new HARP applications after December 31, 2015.
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HARP Becomes HARP 2.0 (And Maybe HARP 3)
The Home Affordable Refinance Program launched in March 2009 as part of the government's broader Making Home Affordable program. Home values had been falling at the time and so were current mortgage rates
. Additionally, the economy was entering recession.
The government devised HARP as a way to help U.S. homeowners and
the U.S. economy.
By helping homeowners to get access to lower mortgage rates, the "Obama Refi" meant to save homeowners $3,000 annually; money which could be then spent on goods and services to propel the economy ahead.
As mortgage rates fell, though, those estimates were proved low. For many households, savings were much greater than three thousand dollars per year. Unfortunately, though, fewer homeowners than expected found themselves HARP-eligible.
HARP was touted as a program which would help 7 million U.S. households. After nearly three years, though, it had failed to reach even one
million. This is when the government embarked on a HARP mortgage overhaul.
In late-2011, HARP 2.0 was announced
, with two major changes.
The first major change was HARP's allowance for unlimited loan-to-value (LTV)
. Prior to HARP 2, refinance loans had been limited to 125% loan-to-value. The update helped homeowners in hard-hit states get access to the Home Affordable Refinance Program.
Previously, residents of California, Florida and Arizona has been too far underwater to meet HARP's loan-to-value requirements.
The second HARP change expanded the number of lenders with which a homeowner could refinance.
HARP 2 was a hit. Within 12 months, another one million loans has closed and, because mortgage rates had continued to drop, the typical HARP household was saving 30% or more.
Today, HARP closings are slowing
. Q1 2014 saw the fewest closed HARP loans since the program first launched. It's fueled speculation
that a HARP 3-like program is on its way.
There are few known details about HARP 3
but, like HARP 2, it would help homeowners whose home loans are currently outside the program's scope.
Potential HARP 3 changes
include a waiver for non-Fannie Mae and non-Freddie Mac mortgage; a change in the program start date to 2010 or 2011; and an allowance to "re-HARP" an existing HARP loan.
There's no timetable for a passage of HARP 3. Some people believe HARP 3 will happen soon.
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HARP Loan Eligibility Requirements
For homeowners meeting HARP loan program's eligibility requirements, getting approved for a HARP loan
is relatively straight-forward. Paperwork requirements are often less than with a traditional mortgage refinance and, in many cases, home appraisals are not required.
To qualify for HARP
, homeowners must be able to answer "yes" to the following three questions :
- Does your home have less than 20% equity?
- Have you paid your mortgage on-time for the last 6 months?
- Did your loan start on, or before, May 31, 2009?
The fourth requirement is that your current mortgage must be secured by Fannie Mae or Freddie Mac, which many loans are.
Because there is no loan-to-value restriction on a HARP loan, home appraisals are rarely required with HARP but there are other program notes worth knowing, too.
As one example, you can use HARP to refinance a mortgage when your home has a second mortgage
, too. However, HARP will not allow you to combine the two mortgages on your approval; or, take cash-out at the time of closing.
HARP is for first mortgages only.
Another program note is that HARP can be used on loans with existing private mortgage insurance (PMI).
HARP allows for all types of private mortgage insurance including borrower-paid mortgage insurance (BPMI), lender-paid mortgage insurance (LPMI), and single-premium mortgage insurance.
Your mortgage insurance coverage will neither increase nor decrease via the Home Affordable Refinance Program.
Lastly, don't be discouraged if your first HARP loan application gets declined. It makes sense to apply again. This is because U.S. lenders rarely offer HARP to consumers in the exact way the program's provided. Many enforce additional qualification standards on HARP mortgage applicants, a underwriting process known as an "investor overlay
Some lenders will enforce a minimum FICO score for applicants; others may require additional income verifications. Therefore, if at first your loan is declined, it can be wise to apply again.
Homeowners wishing to use the HARP loan program should plan to act quickly, though. The program will cease to be available after December 31, 2015
Get HARP Mortgage Rates
For U.S. homeowners whose homes have lost value since purchase, the government's Home Affordable Refinance Program is an excellent way to capitalize on low mortgage rates today.
Check your HARP eligibility online and compare today's live rates. The typical HARP homeowner saves much more than $3,000 annually. Many save double that, and more.
Get a rate quote today. Rates are available online at no cost, with no obligation to proceed, and with no social security number required to get started.
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The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.