Basics of the Home Affordable Refinance Program (HARP)

The Home Affordable Refinance Program (HARP) is a federal government assistance program created specifically to help homeowners who are current on their mortgage payments, but who are underwater on their mortgages. That is, they owe almost as much or more than the current value of their homes. No minimum credit score is required, and closing costs can be bundled into the new loan so homeowners don't need much cash up front. With today's low interest rates, qualifying for HARP can save a homeowner thousands.

Benefits of a HARP Refinance

The obvious benefit of HARP is that it provides a refinance option for homeowners who would not typically qualify for refinancing because they owe more than their homes are worth. Other benefits of a HARP refinance include:

Lower Mortgage Payment. Borrowers who refinance with HARP have lowered their monthly mortgage payments by an average of $ 191 / mo.

Lower Interest Rate. When you refinance with HARP, you can take advantage of today's low interest rates. Today's interest rates are over 30% lower than in 2008.

Fixed Interest Rate. If you currently have an adjustable interest rate, a HARP refinance will provide you with a fixed interest rate that can potentially save you thousands over the life of your loan.

No Negative Credit Impact. A HARP refinance creates no negative activity on your credit history.

Eligibility Requirements for a HARP Refinance

HARP is a completely voluntary program. The federal government provides financial incentives for your mortgage company to participate in HARP; However, it is entirely up to your mortgage company whether or not they will offer you a HARP refinance. If your mortgage company does choose to participate in HARP, it must adhere to strict guidelines set by the federal government, including homeowner eligibility requirements. In order to be eligible, you must meet the following criteria (keep in mind that these criteria may change from time to time):

Current on Your Mortgage. No 30-day + late payments in the last 6 months and no more than one in the past 12 months.

Residence Requirement. Your property must be:

  • your primary residence;
  • a 1-unit second home; or
  • a 1- to 4-unit investment property.

Eligible Loan. To be eligible, your loan must be backed by Fannie Mae or Freddie Mac.

Loan Origination Date. Your loan must have been originated on or before May 31, 2009.

If you're not eligible for HARP, don't worry, there are several other mortgage assistance programs that you may qualify for. If you've been turned down for a HARP refinance, try again! HARP guidelines have recently changed and you may now be eligible.

How Do You Get a HARP Refinance?

To receive a HARP refinance, there is an application process similar to when you got your original mortgage. You will need to gather the required information, complete the application, and submit your request for mortgage assistance to your mortgage company. This is where you hear the horror stories from homeowners of hours spent on hold, trying to communicate through automated phone systems, endless requests for more documents, and trying to reconcile conflicting information from the various departments of your mortgage company. Don't worry, help is available and the effort is worth it. If you qualify for a HARP refinance, you could save yourself thousands over the life of the loan.

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