Applying For A Harp Mortgage: A Step-By-Step Guide

The Home Affordable Refinance Program (HARP) was a federal program designed to help homeowners who owed more on their home than it was worth. Introduced in 2009, it allowed eligible homeowners to refinance their mortgages to obtain more stable and affordable rates. To qualify for HARP, applicants needed to meet specific requirements, including being current on their mortgage payments, having a loan-to-value ratio above 80%, and having their mortgages backed by either Fannie Mae or Freddie Mac. While the HARP program has since expired, it's important to note that new programs have emerged to fill the void, offering similar opportunities for homeowners seeking to refinance their mortgages.

Eligibility requirements

The Home Affordable Refinance Program (HARP) was created in 2009 to help homeowners whose home value fell close to or below their mortgage balance following the 2008 housing market crash. HARP has since expired, but there are new programs that allow homeowners to refinance their mortgages. Here are the eligibility requirements for HARP:

To qualify for a HARP mortgage, you must meet the following requirements:

• Your mortgage must be owned or guaranteed by either Freddie Mac or Fannie Mae. Many homeowners are unaware that their mortgages are linked to one of these organizations, as they do not deal directly with the public. You can check online with both Fannie Mae and Freddie Mac to find out if they back your mortgage.
• Your loan-to-value (LTV) ratio must be 80% or higher. The LTV ratio is calculated by dividing the outstanding balance on your mortgage by the current value of your home and multiplying by 100 to get a percentage.
• Your mortgage must be current, and you must have made your last six payments on time, with a maximum of one 30-day late payment in the past year.
• Your home must be your primary residence, a one-unit second home, or a one-to-four-unit investment property. There are no restrictions on the occupancy type for HARP qualification.
• Your mortgage must have started in mid-May 2009 or earlier. This means it must have been securitized before June 1, 2009. You can find your mortgage start date by checking your closing paperwork.
• You must provide the necessary documentation, including bank statements, a driver's license, homeowners insurance information, pay stubs, and W-2s. If you are self-employed, you will need to provide several years of tax returns to verify your income.

Application process

The Home Affordable Refinance Program (HARP) was a federal program of the US Government, set up by the Federal Housing Finance Agency in March 2009. The program was designed to help underwater and near-underwater homeowners refinance their mortgages.

To apply for a HARP mortgage, there are several steps you need to follow. Firstly, determine whether your loan is a Freddie Mac or Fannie Mae-owned loan. This is a crucial step as the HARP program was designed specifically for mortgages backed by these organisations. You can check online with both Fannie and Freddie to find out if they back your mortgage.

The next step is to ensure you meet the eligibility requirements. These include:

• Being current on your mortgage payments with no 30-day delinquencies in the past six months and no more than one 30-day delinquency in the previous 12 months.
• Having made the last six mortgage payments on time, with a maximum of one 30-day late payment in the year.
• Obtaining the mortgage on or before May 31, 2009, and having it securitized prior to June 1, 2009.
• Having a loan-to-value ratio of 80% or higher on the home.
• The property must be your primary residence, a second home, or a 1-to-4 unit investment property.

If you meet these requirements, you will then need to gather the necessary documentation. This includes bank statements, a driver's license, homeowners insurance information, pay stubs, and W-2s. Self-employed individuals will need to provide tax returns to verify their income.

Once you have your documentation ready, you can submit your application. It is important to act quickly, as the HARP program was initially scheduled to end on December 31, 2015, but was extended through 2016.

Alternative options

There are several alternative options to the HARP mortgage program. Firstly, you can explore other government loan refinancing programs that can assist borrowers with little to no equity. These programs can provide similar benefits to HARP, such as lower monthly payments, interest rates, and shorter loan terms.

Fannie Mae's High Loan-to-Value Refinance Option (HIRO) is one such alternative. HIRO is designed for homeowners with little or no equity who want to refinance their mortgage for a lower interest rate. To be eligible for HIRO, you must have an existing Fannie Mae mortgage, a mortgage originated on or after October 1, 2017, and be current on your mortgage payments.

Another option is Freddie Mac's Enhanced Relief Refinance Mortgage (FMERR), which, like HIRO, aims to help eligible borrowers refinance their loans. However, both HIRO and FMERR have been paused due to low application volume.

Other loan assistance options include the FHA Streamline Refinance, VA Interest Rate Reduction Refinance Loans (IRRRL), and USDA Streamlined Assist Refinance Loans. These programs offer various refinancing benefits depending on the type of existing mortgage. For example, the FHA Streamline Refinance requires a waiting period of 210 days from your last closing before applying, but it can provide a new term length and lower interest rates.

To determine the best alternative option for your specific situation, it is recommended to talk to your mortgage holder or a local lender to explore refinancing options further. By doing some research and comparing different programs, you may be able to save thousands of dollars over the life of your mortgage.

Pros and cons

The Home Affordable Refinance Program (HARP) is a US federal program designed to help homeowners who are struggling with their current mortgages. It was established in 2009 by the government to help those whose homes are "underwater", meaning they owe more on their mortgage than their home is worth.

Pros

HARP allows homeowners to refinance into low mortgage interest rates even if the property has decreased in value. It also enables borrowers to refinance their mortgage without a minimum credit score or maximum borrower debt-to-income ratio. This means that even if you have credit challenges or a drop in income, you may still be eligible for refinancing.

HARP can help you make timely payments on your mortgage and avoid harming your credit. It also offers tax advantages, such as being able to deduct monthly payments on your mortgage and write off discount points over the life of the loan.

You can also lower your overall payments by consolidating many bills into one loan, and requesting longer terms for repayment. Additionally, it often allows you to borrow more than your original loan, which can be useful for emergencies.

Cons

There are strict loan requirements that limit program eligibility, and your mortgage must meet certain guidelines to qualify for the refinance program. For example, your mortgage payments must be current and up to date without any late payments in the last six months. You will also need to provide bank statements, a driver's license, homeowners insurance information, pay stubs, and W-2s. If you are self-employed, you will need to provide tax returns to verify your income.

There are also many fees involved in HARP refinancing, including closing and settlement costs, as well as costs of home appraisal and application fees. Additionally, if you add money to your mortgage balance, you will be required to make higher monthly payments.

Finally, while HARP does not require a minimum credit score, your credit and income will be reviewed, and the loan can be denied if you do not qualify. If you have high balances on your credit cards or existing loans, you may not get the terms you want, and your lender may not agree to the new terms.

HARP 2.0

The Home Affordable Refinance Program (HARP) is a federal program of the United States government. It was set up by the Federal Housing Finance Agency in March 2009 to help underwater and near-underwater homeowners refinance their mortgages. HARP 2.0 was introduced in December 2011 to expand the eligibility criteria for the program.

To be eligible for HARP 2.0, homeowners must meet the following criteria:

• The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
• The mortgage must have been closed or sold to Freddie Mac or Fannie Mae prior to May 31, 2009.
• The homeowner must be current on their mortgage payments, with no late payments in the last six months and no more than one late payment in the last twelve months.
• The current loan-to-value ratio (LTV) of the property must be greater than 80%.
• The homeowner must benefit from the loan by either having lower monthly payments or moving to a more stable product.

Frequently asked questions