Home Affordable Refinance Program (HARP) is a mortgage-refinancing program offered to homeowners by the Federal Housing Agency. It is specifically offered to homeowners who have homes that are worth less than the outstanding balance on the home loan. It was created in 2009 to deal with the housing downturn.
This refinancing program is beneficial for those homeowners who are struggling to pay a mortgage due to their unexpected financial hardships. An applicant should consider refinancing their loan through HARP only if they have a good payment history that did not incur any extra interest due to overdue payments and if they owe more than what their house is worth.
Some advantages of refinancing your home loan through HARP are mentioned below:
- HARP lowers the mortgage rate incurred against a home loan
- It helps in shortening the loan term
- You can also transfer it to an adjustable-rate mortgage in a fixed-rate loan to reduce the mortgage rate and shorten the loan term
- HARP also helps in bundling closing costs into a new home loan
- You have to do minimum paperwork when compared with a traditional refinancing option. This makes the application process easier and smoother
- There is no minimum score required to qualify for a HARP loan
- You also don’t require to get an appraisal or have a loan underwriting from your previous lender, making refinancing process easier and faster
- It does not have underwater limits, which increases your chances of getting your loan refinanced through HARP
Following are the eligibility requirements to qualify for HARP:
- The applicant should be on the current mortgage and should not have more than one instance of late payment in an entire year
- The home that the applicant is applying to refinance through HARP should be their primary residence, a single-unit second home or an investment property
- The previous loan that the applicant is planning to refinance should be owned by Freddie Mac or Fannie Mae. It should be originated on or before May 31, 2009
- The current loan-to-value (LTV) ratio must be greater than 80 percent, which is the lending risk assessment ratio used by financial institutions and lenders before they can approve a mortgage
There are tools to calculate your LTV and refinancing options through HARP’s loan look-up tools available on their official website.
Although you cannot enroll in refinancing your home loan through HARP more than once, they have rehashed their eligibility criteria, which might increase your chances to get a refinancing program through the same.