Are you one of the millions of Americans turned upside down in their home mortgages during the recession? If so, you know it has been a long and sometimes difficult journey to get back on track. But did you know that, from 2009 - 2018, the Home Affordable Refinance Program (HARP) was designed to help struggling homeowners refinance their mortgages at more favorable terms?

This post will outline exactly how the HARP program worked for homeowners. From income requirements to loan types accepted and eligibility criteria, we'll explain everything you need to know about refinancing your mortgage with a HARP loan. Read on for more detailed information about this important housing relief program.

Background

Millions of borrowers have been greatly impacted by the housing crisis and recession that began in 2008. Many have struggled to keep up with their mortgage payments and feel helpless as interest rates continue to climb. The Home Affordable Refinance Program (HARP) was created to provide relief for those borrowers in 2009.

HARP Loan Program Work

HARP was a federal program that allowed eligible borrowers to refinance their mortgages at more favorable rates and terms, even if their homes had dropped in value. It was designed to help people unable to take advantage of traditional refinancing due to declining home values or other factors.

To be eligible for HARP, borrowers had to meet certain income requirements, have a loan that originated before June 1, 2009, and have yet to receive any late payments in the previous six months.

Qualifying criteria

In addition to income requirements and loan origination dates, there were certain criteria that borrowers had to meet to be eligible for HARP. Borrowers had to have a loan-to-value (LTV) ratio of 80 or higher, meaning that their home was worth less than 80% of what they owed on the mortgage.

Furthermore, their loan had to be owned by Fannie Mae or Freddie Mac, and they could not have used HARP in the past.

HARP 2.0 and PMI

In 2012, the HARP program was updated and renamed "HARP 2.0". This version of the program allowed borrowers to refinance without having to pay private mortgage insurance (PMI).

In addition, it removed the LTV requirements for the original version of HARP. Even borrowers with an LTV ratio of 105 or higher were eligible for the program.

Occupancy type

HARP was available to both primary and secondary residence homeowners. However, it is important to note that the program was not available for investment or rental properties.

HARP 3.0

The final version of the HARP program was announced in 2015, and it included several changes that made it easier for eligible borrowers to take advantage of the program. These changes included new loan origination dates, reductions in fees, an expanded eligibility window, and more lenient requirements for underwater mortgages.

Appraisal waiver

HARP offered an appraisal waiver to eligible borrowers, meaning they did not have to order a new appraisal or have their home inspected to qualify. This made the refinance process much simpler and less costly for those borrowers.

Extension of program

In 2018, HARP was extended until December 31, 2018. This allowed borrowers who still needed to take advantage of the program to do so before the end of the year.

Benefits of HARP

The primary benefit of HARP was lower interest rates and monthly payments. Borrowers approved for a refinance could also end up with better terms on their loans, such as shorter loan lengths or no out-of-pocket costs. Other benefits included avoiding foreclosure and access to assistance programs that could help with property taxes and closing costs.

Harp Loan Disadvantages

Unfortunately, there are some drawbacks to taking out a HARP loan. Even though the interest rates may be lower than other types of loans, the costs associated with obtaining and maintaining the loan can be quite high. Additionally, while you can often refinance your mortgage with little or no money down using HARP, closing costs can still add up, making the loan more expensive. Additionally, some lenders may still require an appraisal of your home to approve a HARP loan, which can add time and money to the process.

FAQs

How does HARP work?

The Home Affordable Refinance Program (HARP) was created to help homeowners struggling with their monthly mortgage payments due to a decline in their home's value during the recession. This program allowed them to refinance their loan at more favorable terms, lowering their interest rate and monthly payments.

What types of loans are accepted through HARP?

The program accepts various loan types, including conventional fixed-rate mortgages, adjustable-rate mortgages (ARMs), and government-insured loans.

What are the income requirements for HARP?

Your borrowers must meet certain income requirements to be eligible for HARP. These include having a stable source of income and being able to afford the new loan payment after refinancing.

What must other eligibility criteria be met?

In addition to income requirements, there are a few other factors that must be taken into consideration when determining eligibility for HARP. These include whether or not the loan is current (with no more than one late payment in the last 12 months) and if the loan-to-value ratio is greater than 80%.

What are the benefits of refinancing through HARP?

Refinancing your loan through HARP can offer many benefits, including lower interest rates, shorter repayment terms, and a reduced monthly payment.

Is HARP mortgage legitimate?

Yes, the Home Affordable Refinance Program is a legitimate program designed to help struggling homeowners refinance their mortgages. It has helped more than 3 million Americans become financially secure since 2009.

When did the Harp program end?

The HARP program officially ended in December 2018. Although the program is no longer active, homeowners struggling with their current mortgage may be eligible for other refinancing options.

Who created the harp program?

The HARP program was created in 2009 by the Federal Housing Finance Agency (FHFA) to help struggling homeowners refinance their mortgages at more favorable terms.

Why was the Harp abandoned?

The HARP program was abandoned in 2018 due to the improved housing market. With increasing home values and a more stable economy, fewer homeowners struggled with their mortgage payments, making it unnecessary to continue the program.

Conclusion

Refinancing through the Home Affordable Refinance Program (HARP) was a great option for many struggling homeowners. It allowed them to refinance their mortgages at more favorable terms and reduce their monthly payments. However, it is important to remember that the program has now ended and is no longer available. If you require mortgage assistance, other options are still available.