When you owe as much or more on your mortgage than your home is worth, it can be difficult to find a lender willing to help you refinance. But for borrowers who have remained current on their mortgages, and have loans owned by Fannie Mae or Freddie Mac, there is hope. It’s called HARP.
As part of the Making Home Affordable Program, HARP was introduced in 2009 by the Federal Housing Finance Agency (FHFA).
Through HARP, you can get a lower interest rate (which means less out-of-pocket costs each month), get a shorter loan term, or change from an adjustable to fixed-rate mortgage. There’s no minimum credit score needed, either.
And now that HARP guidelines are simpler, even people who were formerly turned down may now be eligible for HARP refinancing.
If you are current on your mortgage; have a mortgage that is owned by Fannie Mae or Freddie Mac, and owe as much or more than your home is currently worth, you may be eligible for HARP refinancing.
THAT CAN MEAN SIGNIFICANT SAVINGS BY:
- Lowering your monthly payment
- Reducing your interest rate
- Securing a fixed-rate mortgage that won’t change over time
- Building equity faster—shorter term options may be available
- Lower closing costs because an appraisal is not usually required
New, simpler HARP guidelines are designed to approve more loans. And changes to the program itself mean that even if you were turned down for HARP before, you may now meet the requirements.
IMPORTANT CHANGES IN HARP 2.0
NO UNDERWATER LIMITS
Borrowers will now be able to refinance regardless of how far their homes have fallen in value. Previous loan-to-value limits were set at 125 percent.
NO APPRAISALS OR UNDERWRITING
Most homeowners will not have to get an appraisal or have their loan underwritten, making their refinance process smoother and faster.
Certain risk-based fees for borrowers who refinance into shorter-term loans have been reduced.
Lenders now need less paperwork for income verification, and have the option of qualifying a borrower by documenting that the borrower has at least 12 months of mortgage payments in reserve.