If you’re current on your mortgage and have a mortgage backed by Fannie Mae or Freddie Mac, there’s a program to help you lower your mortgage rate and payment. It’s called HARP mortgage program and more than 3 million U.S. homeowners have used it already.
If you want to use HARP, you better act quickly however, the program’s expiration date is approaching. .
WHAT IS THE HARP PROGRAM?
The Home Affordable Refinance Program (HARP) is a federal government mortgage refinance program. It originally launched in March 2009.
HARP was designed to help underwater homeowners refinance their existing mortgages to new, lower mortgage rates. A homeowner who is “underwater” is one who owes more on a home than the home is worth.
The HARP program specifically targets homeowners whose loans are backed by Fannie Mae or Freddie Mac; who are not currently “late” with their mortgage payments; and who cannot reasonably refinance due to home depreciation.
With HARP, homeowners who put 20% down at the time of purchase can refinance without incurring new private mortgage insurance (PMI) costs. If you don’t pay PMI now, you won’t pay PMI after doing a HARP refinance.
Similarly, if your mortgage insurance is based on your original 5%, 10% or 15% down payment, via HARP, no matter how far underwater you are, you will continue making PMI payments in your new loan as if you still had the same, original percentage of equity.
Note that HARP should not be confused the Home Affordable Modification Program (HAMP), which assists homeowners in danger of foreclosure. If you’re in danger of losing your home, use HAMP not HARP.
WHO IS ELIGIBLE FOR THE HARP PROGRAM?
HARP was originally launched in March 2009. Then, in November 2011, the government announced changes meant to widen the program’s eligibility net.
As a result of the changes, some homeowners turned down for HARP’s initial release are now eligible for its second iteration. The program changes include a revision to loan-to-value (LTV) calculations — unlimited LTVs are now HARP-eligible — and a simplification of the “cross-lender” HARP refinance.
Under the new HARP 2.0, homeowners no longer have to refinance with their current mortgage lender. You can refinance with any lender, anywhere.
More than 3.0 million U.S. homeowners have used HARP since its release, however, there are still an estimated 3 million HARP-eligible homeowners who have not yet used HARP. The typical HARP refinance saves 28% annually which means that there are potentially billions of dollars of unclaimed savings.
HARP expires on the last day of 2016.
HOW TO APPLY FOR HARP
Getting approved for HARP is a similar process to getting approved for any other refinance.
As part of the approval, you should expect to provide basic financial information such as your current mortgage statement, your homeowners insurance policy and your pay stubs and tax returns. There are instances in which pay stubs and tax returns are not required, and you can ask your lender about whether you qualify for that particular program variation.
You should also be sure that your loan is backed by either Fannie Mae or Freddie Mac. In general, you can assume your mortgage is backed by Fannie Mae or Freddie Mac if you make your mortgage payment to a “major” lender such as Wells Fargo, Bank of America, CitiMortgage, Chase, Fifth Third, Citizens Bank, U.S. Bank or PNC, and your starting loan was not jumbo-sized. Your lender can also provide a lookup table for your verification.
Note that loans backed by the FHA are not HARP-eligible, nor as loans via the Department of Veterans Affairs. For these loan types, underwater homeowners can use the FHA Streamline Refinance and VA Streamline Refinance (IRRRL) programs, respectively.
Next, you’ll want to verify the following:
- Your loan was funded on or before May 31, 2009
- Your loan has not been previously refinanced via HARP, except prior to May 2009
- Your home has less than twenty percent equity in it
- You have made no late payments in the last 6 months
- You have make no more than one 30-day late payment within the last year
The HARP program can be used for primary residences, vacation properties, and rental homes. However, not all lenders participate in the HARP “rental home” program.
If your lender will not allow HARP on your investment properties, seek another lender. There are many lenders which will refinance a non-owner occupied home via the Home Affordable Refinance Program.
LOWER YOUR RATE AND PAYMENT WITH HARP
HARP mortgage guidelines have changed since its initial 2009 launch. Homeowners who weren’t eligible for the initial HARP release are now eligible for today’s HARP 2.0.
Find out your eligibility before the program expires, or before interest rates go up. You’ll lower your interest rate, reduce your monthly payment and, in most cases, an appraisal is not required.
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