While there have been a handful of programs designed to help people refinance and take advantage of lower interest rates since the housing downturn, none has been as successful as the Home Affordable Refinance Program, commonly referred to as HARP.
HARP was first announced in April 2009 and was revised (called HARP 2.0) in March 2012. The following information is accurate as of July 2012, but with at least some talk of a possible HARP 3.0 revision coming, there could be further changes to the program in the future.
Which loan types are eligible?
HARP is not designed for just any type of mortgage loan; it is designed exclusively for conventional loans that are backed by Fannie Mae or Freddie Mac. If you have a loan that is not backed by Fannie Mae or Freddie Mac (for example, an FHA, VA, jumbo or USDA loan) it is not eligible for the program. In addition to being backed by Fannie Mae or Freddie Mac, the loan must have had a securitization date prior to June 1, 2009.
The easy way to tell whether your loan is HARP-eligible is to use the easy lookup tools provided by Fannie Mae and Freddie Mac:
Also, in order to be HARP-eligible, you must have not participated in HARP before and must have made your mortgage payment on time for the previous six months, with no more than one late payment in the past 12 months.
Not all lenders are participating in HARP
Once you have established that your mortgage is HARP-eligible, the next step is to find a lender that can help you take advantage of the program. If your current lender isn’t participating in HARP, it doesn’t mean that you are stuck. Thanks to the guideline changes of HARP 2.0, you can use any lender you wish.
Just because everybody doesn’t qualify for HARP doesn’t mean that you have to settle for a higher-than-normal interest rate. Getting a HARP refinance quote is really as simple as getting any type of refinance quote; it is in your best interest to shop multiple lenders and get a Good Faith Estimate from each one. HARP interest rates (just like any other refinance program rates) will vary from lender to lender, and you might be surprised at how much money you can save just by shopping around a little bit. Here is a great place to start.
What if you get turned down?
Once you have discovered that your mortgage is HARP-eligible and you have selected a lender to work with, don’t be alarmed if a lender turns you down somewhere along the line. The HARP guidelines will vary from lender to lender regarding things such as loan-to-value ratio, credit scores and mortgage insurance rules. If one lender turns you down, talk to another one.
I have seen multiple people complete a HARP refinance after being told “no” by multiple lenders, with the most common reason for being turned down related to how far underwater their current mortgage is. In states like Arizona, Florida, Nevada and parts of California, it is not unheard of for someone to owe more than twice as much on their mortgage as their home is worth — and they will still be eligible for HARP according to the program guidelines (although some lenders might not go higher than 125 percent).
Lenders are actively helping homeowners refinance into record low rates with HARP, and if you are a homeowner who has been unable to refinance because you owe more on your mortgage than your house is worth, HARP was designed to help you.
In the event that you have a loan that isn’t currently eligible, don’t lose all hope. The HARP guidelines have been expanded once and may be expanded again.
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Justin McHood is America’s Mortgage Commentator and lives in the Phoenix, Arizona area. You can find Justin on Facebook, Twitter, and LinkedIn. He is happy to answer any mortgage-related questions that you may have.
Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.