A HARP (Home Affordable Refinance Program) mortgage is a home loan refinance program that offered homeowners the ability to refinance.
Many homeowners have “underwater mortgages,” which means they owe more on their mortgage than the value of the property. This circumstance makes it difficult, if not impossible, for these homeowners to refinance because there isn’t enough equity available for credit. This is a frustrating and discouraging situation.
At the beginning of 2020, 3.4% of all mortgaged properties—some 1.8 million homes—had underwater mortgages (negative equity).
In March 2009, the original HARP mortgage program launched and helped over 3.5 million homeowners with negative equity to refinance their homes without getting new mortgage insurance, and despite the poor loan-to-value ratio (LTV). The program ended in December 2018.
This mortgage program was also called Making Home Affordable, A Better Bargain for U.S. Homeowners, the Obama Refi, Relief Refinance, and DU Refi Plus.
HARP didn’t loan money. Instead, it worked with lenders to provide refinancing for qualified homeowners.
Related: Benefits of Buying a Home
A homeowner must meet the following requirements to qualify for HARP refinancing:
✔ The mortgage must be guaranteed or owned by Fannie Mae or Freddie Mac
✔ The mortgage must have been sold to them by May 31, 2009
✔ Eligible property types include primary residences, single-unit second homes, and one-to-four unit investment properties
✔ You cannot have previously refinanced with HARP, unless it was with Fannie Mae between March and May 2009
✔ Homeowners must be current on their mortgage payments, with no more than one late payment in the last 12 months
✔ The current loan-to-value (LTV) must be at least 80%
If you meet the requirements, you may be HARP-eligible. Mortgages like VA, USDA, FHA, or jumbo loans are not eligible for HARP.
Now that you know you qualify for HARP, here are 5 things you should do next:
If you aren’t sure who is securing your loan, Fannie Mae and Freddie Mac have tools to check. If your mortgage isn’t listed, unfortunately, you are not HARP-eligible.
If you already have mortgage insurance, your new HARP loan must have the same level of coverage.
Eligible mortgages were securitized before June 1, 2009, which means your loan must have started around mid-May 2009. Double-check your paperwork.
The HARP process is like any other home loan. You’ll need to provide:
Driver’s license, bank statements, pay stubs, homeowner’s insurance, and W-2s.
Self-employed homeowners will need several years of tax returns to prove income.
The faster you submit this info to the lender, the sooner you’ll know if you're approved and what your rate might be.
We’ve helped a record number of clients get low rates and meet financial goals. How can we help you? Call Mares Mortgage today!
Since HARP ended, homeowners with underwater mortgages may qualify for Streamline Refinancing.
Note:
This program was created to help homeowners with less than 5% equity who didn’t qualify for traditional refinancing.
Streamline differs from HARP in key ways:
✔ No expiration date – it’s a permanent option
✔ No required loan start date – unlike HARP
✔ Can be used more than once – unless the loan was previously refinanced with HARP
Related: Avoiding First-Time Home Buyer Mistakes
Homeowners must benefit in at least one of these ways to qualify for Streamline:
✔ Lower interest rate
✔ Lower monthly principal and interest payment
✔ Convert from an adjustable-rate to a fixed-rate mortgage
✔ Shorter loan term
Just like HARP, borrowers must be current on payments, with no more than one missed payment in the past year.
Only Fannie Mae loans can refinance into new Fannie Mae loans, and the same goes for Freddie Mac.
There is a minimum LTV, depending on how many units the property has:
Like HARP, Streamline has:
✔ No credit score minimum
✔ No max LTV or debt-to-income ratio
✔ No appraisal required
Related: Reasons to Refinance Your Home
These programs are lifelines for homeowners with interest rates around 5%–6%. During economic downturns, refinancing may offer:
✔ Another 30-year mortgage
✔ Lower monthly payments
✔ Possibly a lower loan balance
Still have questions about securing a mortgage? We’re the people to ask. Call Mares Mortgage today!
