HARP (the Home Affordable Refinance Program) was established by the federal government in early 2009 in response to the housing market crash of 2008. Under this program, homeowners who are still current on payments, but who found themselves “upside down” on their mortgages, can refinance their interest rates to lower their monthly payments. This program is set to expire at the end of 2018. If you believe you could benefit from it, you need to act quickly.
Upside Down or Right Side Up?
When we talk about being “upside down” on a mortgage, we mean the homeowner owes more than what the property is currently worth. Many people instantly lost equity in their homes when the market crashed. And what’s worse, people who had put little to no money down when they purchased the home suddenly owed more than what their home was now worth.
This program was the first option for many homeowners to get relief from the market crash. Traditional refinancing options require a loan-to-value ratio lower than 75%. This means homeowners must have at least 25% equity in their homes. HARP works with borrowers who have an LTV ratio of greater than 80% (meaning they have less than 20% equity in their homes). In fact, it is available to people regardless of how far underwater they are, as long as they have had minimal delinquencies on their payments in the last 12 months.
Why HARP Helps
Since HARP is available to those with little (or negative) equity, borrowers hit hardest by the housing market crash can get some relief. The program helps by refinancing the mortgage at a lower interest rate, which drops the monthly payments. And because it is refinanced at a fixed rate, the mortgage payments remain consistent.
HARP Expiring Soon
This program is currently set to expire at the end of 2018. If you are considering taking advantage of this program, now is the time to act. To date, more than 3 million households have successfully refinanced under this program. You can refinance with any HARP-approved lender, even if you originally secured your mortgage through a different lender. Our HARP loan qualifier tool can help get you started.
To qualify, borrowers must meet several stipulations. First, the home loan must be a Fannie Mae or Freddie Mac-backed mortgage (as opposed to an FHA, conventional, or VA loan). Second, borrowers must have originated that mortgage on or before May 31, 2009. Third, as mentioned above, borrowers must be current on payments and have less than 20% equity in the home.
Additionally, borrowers may not realize they can reapply for HARP assistance if they were turned down previously. Also, borrowers can take advantage of HARP even if the property is not their primary residence. There are many great reasons to take advantage of this program before it expires at the end of the year.