Home Affordable Refinance Program

Home Affordable Refinance Program

HARP

The Home Affordable Refinance Program (HARP) is also known as the Obama Refinance program. This program was put into place by the Obama Administration in 2009. This federal program aids in assisting homeowners to refinance their home in order to achieve lower interest rates. This program was established for homeowners who have built minimal equity on their home or for those who are financially upside down in their loan. Homeowners who are current on their mortgage, but cannot qualify for a refinance because the home has depreciated in value, are great candidates and should apply for the HARP program.

HARP Loan

HARP Eligibility

Since the HARP program was put into place in 2009, it has changed several times to meet basic eligibility requirements. The following includes requirements needed to qualify:

  • The homeowner's loan must be owned by Fannie Mae or Freddie Mac
  • The loan must have been dated on or before May 31, 2009
  • The current loan-to-value ratio is higher than 80%
  • The mortgage payments have remained current on the home
  • There are no late payments
HARP Eligibility

Benefits of a HARP Refinance

The benefits of the HARP refinance program can help homeowners who cannot obtain traditional refinancing because the value of their property has declined. These homeowners who are upside down on their mortgage usually apply for the HARP program. Homeowners who have multiple loans whether it be a first or second mortgage can also qualify. Keep in mind, there are no ceilings on LTV ratio to qualify for this refinance loan. In addition, there is no need for mortgage insurance with this program unless your loan already has a private mortgage insurance. The homeowners who benefit from this refinance program the most are those with interest rates between 6% and 8%.

HARP

HARP Closing Costs

The HARP program requires closing costs when the refinance process is complete. The good news is that homeowners can divide the closing costs within the duration of the loan and does not have to be paid for all at once. The homeowner can attach the monthly payment of the closing costs onto their monthly mortgage. Freddie Mac will allow up to 5% or $5,000 (whichever is less) to get added to the standing balance. Fannie Mae limits the closing costs at 4% of your present balance. However, if the closing costs are higher than the allotted amount, then the remainder must be paid out of pocket.

Obama Refinance program

How to Apply for a HARP Loan

There is no need to apply for a HARP loan through the same lender who initially set up your original loan. In fact, many lenders are well versed in this program and can help you obtain your refinance loan. The cost to refinance will vary from lender to lender, so be sure to shop around for the best rate and terms.

How to Apply for a HARP Loan
 
 
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