HARP

HARP Refinance Loan Benefits

Refinance your home with a HARP loan.  Whether you want a lower monthly mortgage payment because interest rates are now lower, or you want to get into a better loan program because your adjustable rate is about to skyrocket, a HARP loan may be just the ticket.  Even if your mortgage is upside down and you owe more than the current value of your home you should select a HARP loan; that is exactly why they were designed. This mortgage loan will improve your financial position because it saves you a lot of money in interest payments or locks in a great fixed rate for a long term; you may not even need an appraisal – What a deal!

HARP stands for Home Affordable Refinance Program and has been developed for homeowners that have been paying off their Fannie Mae and Freddie Mac mortgages, but are unable to refinance because of declining home values.  It is an official Making Home Affordable program of The US Treasury Department as well as The Housing and Urban Development Department (HUD).  If it has been a few years since you purchased or refinanced your home then see if you qualify:

  • Freddie Mac or Fannie Mae owned mortgages only
  • Freddie or Fannie have owned/insured the mortgage since at least May 31, 2009
  • You have not refinanced under HARP previously (Fannie Mae exception from March-May 2009)
  • Current on the mortgage with a good payment history for the last year
  •  Additional qualifications apply like good credit and employment

This is not a principle reduction loan, but a first mortgage that allows homeowners to refinance their current loan on their primary residence, second home or investment property.  It also does not allow for cash out refinances; $250 back to the borrower is all that is allowable.  But, you can roll in the closing costs in most cases, and it allows homeowners to keep a second mortgage in place most of the time.

Some would think that since the value of their home dropped and their loan amount was now over 80% of the appraised value, they would now have to purchase mortgage insurance and that would negate the interest savings of the refinance. Certainly, that is not the case with a HARP loan.  Only if you currently have mortgage insurance would you need to keep it; if you do not currently have mortgage insurance then you will not need it for HARP.

Many borrowers have decided to go one step further to improving their long term financial condition using HARP to cut the numbers of years off of their mortgage.  Since interest rates are lower than they were a few years ago they have found that going to a 15 or 20 year loan can cut 7 to 12 years off of their financing with only a small increase in monthly payments. This saves them 10’s of thousands of dollars.  So even if your home is not as valuable as it once was it continues to be a major financial consideration and should be managed accordingly; there are many valuable aspects of a HARP loan.

Summarizing, HARP is the program if you have been making your mortgage payments timely, have a job and good credit and you want to refinance your Fannie or Freddie loan but are upside down on your home mortgage.  Mortgage insurance – if you don’t have it now, don’t worry about it.  If you have not refinanced using HARP then reduce your monthly mortgage or overall interest costs now and be in a better financial position for the long term, while we all wait on home values to go back up.  It will happen.