What the heck is a HARP loan?
HARP stands for Home Affordable Refinance Program. HARP is a federal program set up by the Federal Housing Finance Agency in March 2009 to help homeowners who are upside down or close to being upside down with refinancing their mortgage. HARP was designed to help borrowers get a more affordable and stable mortgage
You may be eligible for HARP if you meet all of the following criteria:
The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
Own a 1- to 4-unit home as your primary residence, a 1-unit second home, or a 1- to 4-unit investment property.
The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
The current loan-to-value (LTV) ratio must be greater than 80%.
The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.
If your loan is owned by Freddie Mac, you may check your potential eligibility for HARP here.
If your loan is owned by Fannie Mae, you may check your potential eligibility for HARP here.
Ask your mortgage servicer (the company to which you make your mortgage payments) if they participate in HARP. Not all mortgage servicers do.
Contact Fannie Mae or Freddie Mac for help in determining if you may be eligible for HARP. Program ends December 31, 2015.
Steps for a HARP loan refinance
Determine whether your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac by visiting their respective loan lookup tools. You can find the links to their websites in the paragraph above.
Contact your current mortgage servicer or another that is approved by Fannie Mae or Freddie Mac to inquire about HARP.
Compare rates and costs with additional mortgage companies to ensure best refinance terms.
If your taxes and insurance are currently in escrow, they must be escrowed in the new loan also.
If the original loan did not have Private Mortgage Insurance (PMI), the new loan is not required to either regardless if the loan to value ratio is over 80%.
If you have a second mortgage on the property, it can not be rolled into the new HARP loan. It must be subordinated as a second lien again. Make sure your second mortgage holder will subordinate the loan again to qualify for the new HARP loan.
You may choose any lender you like to do the HARP loan as long as they participate with the HARP loan program.