Do I Qualify for the HARP Program?

Owning a home can be a great investment for your future and for your family. However, owning a home can also have its share of stressful challenges and responsibilities.

As the economy has shifted in recent years, many responsible homeowners have found themselves owing more on their homes than it is actually worth. This situation, where the mortgage on the home is higher than the value, is referred to as being “underwater.” Prior to 2009, millions of responsible owners of underwater homes had little to no options to refinance their mortgages.

Luckily in that year, a government-sponsored program called the Home Affordable Refinance Program (or HARP) was created. One of the best-kept secrets among government housing programs, HARP helps people refinance their mortgage to something more affordable and stable. HARP is managed by the Federal Housing Finance Agency (FHFA) and was started to aid homeowners whose loan-to-value ratio exceeds 80%.

HARP is unique in that it is one of the few options available to homeowners who don’t have a lot of equity in their homes. HARP helps borrowers lower their interest rate, which helps lower mortgage payments and put money back in their pocket. A study by Fannie Mae showed that borrowers taking advantage of HARP saved an average of $328/month.

If you are currently feeling overwhelmed because of your mortgage, and have made consistent payments, HARP might be a good program for you.

The original HARP program, created in 2009 and referred to as HARP 1, required mortgages to be backed by Freddie Mac or Fannie Mae, to be secured on or before May 31, 2009 and excluded FHA, USDA and jumbo loans.

The current HARP program, referred to as HARP 2.0, was created in 2012 and includes the following eligibility parameters (as found on the Making Home Affordable website):

• The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
• The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
• The mortgage must not have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
• The current loan-to-value (LTV) ratio of the home in question must be greater than 80%.
• The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.

Many people are unsure if Freddie Mac or Fannie Mae owns their mortgage. If you are unsure, use these helpful online tools to see if Fannie Mae or Freddie Mac owns your loan. The tools aren’t always correct, so you should contact your mortgage company to confirm who owns your loan for a definitive answer.

Additionally, you’ll want to check out what lenders participate in the program. Many big, national banks like Bank of America, CitiMortgage, Chase, Wells Fargo all participate. You can kind a complete list of lenders via KnowYourOptions.com.

An important qualification of the program is that you must be current with your mortgage payments for the last twelve months.

Participating in the HARP program will give you the following advantages:

• Ability to refinance even if your home is underwater.
• Many HARP refinances can be done without an appraisal.
• You may be able to roll most or all of the closing costs to the new loan.
• Private Mortgage Insurance (PMI) is not required if you don’t have PMI on your current loan.
• If you do have PMI, you can transfer your PMI policy to the new HARP loan.
• You don’t have to use your original lender for the HARP loan.

The goal of the HARP program is to help targeted homeowners obtain a new, affordable and stable mortgage, thereby creating a more sustainable situation in the housing market.

Proposed changes to the HARP program (HARP 3.0) are being considered. Some of these changes would include not limiting eligibility to loans backed by Fannie Mae or Freddie Mac.  However, to date, no changes have been finalized in Congress.

An estimated 3 million homeowners have benefited from HARP. If you’re underwater on your mortgage, it’s worth examining whether or not you meet these rules and guidelines to join those who have received help from the program.

Keep in mind that even with proposed changes currently being discussed, the HARP program as a whole does have an end date. The program will close on December 31, 2015, so be sure to take action now.