HARP Program Changes: What You Need to Know
The HARP mortgage program: are you eligible? Do you know about the changes? Here's everything you need to be ready.
Originally set up in 2009 to help homeowners who were underwater or close to underwater refinance their mortgages, the HARP program (Home Affordable Refinance Program) has been updated, and those changes could be welcome news for you. Before you can take advantage of the HARP program, there are several critical points about how to qualify for HARP and what it means if you opt to go the route of a HARP mortgage loan.
To date, more than 3.4 million people have benefited from the program, and now with long overdue changes to the existing program, millions more are set to come onstream. For many individual homeowners, a HARP loan helps them to get out of an ARM into an affordable fixed rate or address high monthly payments.
The question is, will you be eligible to take advantage of the new changes?
Let's take a closer look at the HARP program, its changes, and what it can do for you.
What is the HARP Program?
The aim was clear. It was to help borrowers who were current on their mortgage payments to refinance their mortgage to lower rates. The hope was that with lower rates, these individuals would be in a position to reduce their monthly payments. For those underwater with their mortgages, refinancing hadn’t been an option. Why?
These homeowners hadn't been able to refinance up to that point because of declining property values, limited equity, no equity or negative equity in their homes.
HARP changed all of that.
Who is Eligible for the HARP Program?
With current changes to the program, there are 3 basic requirements:
- Your mortgage must be securitized by Fannie Mae or Freddie Mac before June 1, 2009
- You must be current on the mortgage. In this, you must have no late payments in the last six months (a late payment is defined as being more than 30 days overdue)
- This must be your first refinance through HARP. You cannot have previously refinanced under an earlier version of HARP.
Under the current program, the application deadline has been extended to September 30, 2017. The extended deadline is meant to help homeowners who hadn’t yet been able to take advantage of the HARP loan in the past. However, the program continues to change, opening up eligibility up to more homeowners throughout the United States.
What Changes do I Need to Know About?
While the earlier version of the program benefited over a million homeowners, many borrowers were frustrated that it did little for them.
Enter HARP 2.0.
In the HARP Program 2.0, many of the obstacles that borrowers faced in earlier versions of HARP were removed.
Here are some of the changes:
- The previous version did not allow refinances for borrowers who owed more than 125 percent of the value of their homes. That cap has been removed. Even with that cap, many borrowers would only refinance up to 105 percent of a home's value. Some of the main lenders like Bank of America now fully comply with the new HARP program.
- The current program releases the lender's liability on the original loan. This offers lenders a huge incentive to embrace the program. And, they do.
- With the new changes, Fannie Mae and Freddie Mac no longer require verification of income from at least one HARP borrower. Now applicants can provide proof that at least 12 months of mortgage payments exist in reserve for the subject property.
- The updated program has fewer documentation requirements. The guidelines are easier to understand, they're much more straightforward, and they're designed to approve more loans.
All of this means that if you were not eligible for HARP up to this point, you may be eligible now. And, if you were previously turned down for the HARP program in the past, it might be a good idea to apply again as you may well be eligible now under the new requirements. However, for homeowners who did not have the qualifications for a HARP mortgage, there is a new program offering a refinancing option for those with a high loan to value. What is that program and how could it help you?
Starting in January 2019, the FHFA confirmed that a new HARP-Like program will be open for homeowners. This new program eliminates the requirement that the mortgage loan must have been opened on or before May 31, 2009. Instead, the new HARP-Like program is focused on mortgage loans that have been made on or after October 1, 2017.
This program is also known as the Fannie Mae HIGH LTV (loan to value). Its guidelines specify that borrowers must owe more than 97% of their home’s current value for a primary, single-family residence. If your loan can be underwritten electronically, then you may also be eligible for an appraisal waiver, which could reduce your closing costs even further.
Keep in mind that only existing mortgages can be improved with a refinance are eligible. One of these potential benefits must be part of the refinance:
- Interest rate deduction
- Lower principal and interest payment
- Replace ARM with fixed-rate financing
- Loan term is shortened
Another point to keep in mind is mortgage insurance (MI). If you already have mortgage insurance, then you must have it transferred to your new loan. However, if you no longer needed MI and it has been removed from your loan or you had originally put 20% (thus not being under that requirement), then you do not have to worry about transferring or adding it to your new loan.
There are two different underwriting options available, either electronic or manual options, regardless of whether it’s the same servicer of your loan or a new one. That means you can shop for the best rate for your loan, even if that means going with someone else for your HARP loan.
The HARP program and You
So, consider yourself brought fully up to speed with the HARP program as it currently stands. The HARP program continues to evolve, offering options for HARP mortgage loans and other ways for individuals to address their upside-down home mortgages.
For further information and for expert mortgage advice, reach out and talk to us. We're always here to help with all your mortgage needs.
HARP Loan Program in Florida & the United States
Established by the Federal Housing Finance Agency in March 2009, the Home Affordable Refinance Program (HARP) is a federal program to assist non-defaulting homeowners who cannot refinance mortgages because the value of their homes has fallen. Despite the fall in interest rates, homeowners could not benefit because banks did not allow refinance.
If you’re not behind on your mortgage payments but have been unable to get traditional refinancing because the value of your home has declined, you may be eligible to refinance through with help from HARP (Home Affordable Refinance Program), also known as the HARP Program, a HARP mortgage or HARP Loan.
The HARP Loan is designed to help you get a new, more affordable, more stable mortgage. HARP Loans are refinance loans that still require a loan application and underwriting process, and some refinance fees will apply. A HARP LOAN is much more homeowner friendly and the process is more streamlined than a traditional loan. HARP mortgages truly help homeowners.
Don’t Let Your House Go Underwater, Apply for a HARP LOAN
Like the rest of the U.S., Florida too was hit hard by the housing bubble crash in 2008 when home prices plummeted.
This meant, even worthy borrowers who had not defaulted on mortgage payments could not refinance in Florida and the rest of the U.S. Unlike prices and rates, debt usually remains constant or increases irrespective of economic climate. HARP Programs make it possible to recover from those difficult times. You had the ability to reduce your interest rate and reduce your monthly payment. Why was such an option necessary?
Typically, banks refinance mortgages only if the total outstanding dues under the loan were at or below 80% of the value of the house i.e. a loan-to-value (LTV) ratio of 80% or less. An exception is made only for those who purchase private mortgage insurance (PMI), the purchase of which nullifies the benefits of refinance. The monthly cost of PMI often would end up being as much or almost as much as the monthly savings from the refinance itself.
HARP Loan Programs in Florida and the U.S. were created to allow refinance of credible mortgage borrowers with an LTV ratio of over 80%. Initially the upper limit was 105% that was later capped at 125%. Under HARP 2.0, there is no such LTV ratio cap. So long as you are eligible for HARP, the LTV ratio of your home and mortgage does not matter. That meant those who might not have previously had the opportunity to refinance their homes could be eligible.
Apply for a HARP mortgage now because the deadline has just been extended!
Harp Program News & Updates
In the latest Harp Program news, Fannie Mae and Freddie Mac will be offering a new refinance plan beginning in October 2017. The agency also announced that HARP — the Home Affordable Refinance Program — is being extended until Sept. 30, 2017.
"This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit-risk exposure for Fannie Mae and Freddie Mac," said Melvin Watt, director of the Federal Housing Finance Agency, in a statement.
Housing officials say the new streamlined product is more targeted than HARP. And as with HARP, eligible borrowers will not be subject to a minimum credit score — which can help more struggling homeowners qualify. Another plus: An appraisal often will not be required.
The original HARP eligibility criteria with the HARP program required the loan to be originated before June 1, 2009, to qualify. But there is no such cut-off date under the new refinance option that begins later next year. Another main difference: Homeowners will be able to refinance more than once.
HARP Eligibility and Conditions for HARP
Despite the obvious benefits of reduced repayment amount over a shorter duration, 9 out of 10 eligible homeowners fail to take advantage of HARP LOAN. Refinances, or obtaining HARP eligibility for a HARP mortgage, are available till Sept. 30, 2017. i.e. the mortgage note date of your refinance under HARP should be Sept. 30, 2017 or earlier.
You are eligible for HARP LOAN or HARP Mortgage if your mortgage is:
- owned or guaranteed by Fannie Mae or Freddie Mac
- was sold to Fannie Mae or Freddie Mac on or before May 31, 2009
- was not refinanced under HARP earlier unless it was a Fannie Mae loan refinanced under HARP in the March-May 2009 duration
- current when you refinance it with a good repayment record over the previous 12 months
Save Big with HARP Mortgage Refinance in Florida
Borrowers of Florida loans and Florida mortgages too have to satisfy the same eligibility conditions. Only conventional loans and mortgages qualify for HARP refinance. Jumbo mortgages and loans by the Federal Housing Administration (FHA), Veteran’s Affairs (VA), and United States Department of Agriculture (USDA) do not. Check your HARP eligibility today.
HARP Program Resources
You can apply for the HARP program at: Apply Now
Documents normally required to determine HARP eligibility for the HARP Program:
- information on junior lien mortgage on the house, if any
- latest income tax return
- account balances and monthly payments on all your debts
- account balances and minimum monthly payments on all your credit cards
After you submit your HARP mortgage refinance application, the lender gives you a ‘Truth in Lending Statement’ or a ‘Good Faith Estimate’ with information on the new mortgage payment, interest rate, and the total amount you will pay over the loan’s duration. Compare this with the terms of your current mortgage to check if the refinance benefits you.
Check Your HARP Eligibility
The HARP Program is an innovative product that has helped many a credible borrower, the HARP Program may soon be upgraded to the HARP Program 3.0 version as indicated by President Obama in the 2012 State of the Union Address. This way, the program will be further expanded to include more beneficiaries.
Check if your loan is owned by Fannie Mae and your potential HARP eligibility with our Quick Quote in minutes.
Determine whether your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac by visiting their respective Loan Lookup Tools.
Contact your 7th level mortgage servicer who is approved by Fannie Mae or Freddie Mac to inquire about a HARP mortgage or HARP LOAN.
We will compare rates and costs with additional mortgage companies to ensure the best refinance terms. Call today and we will check you eligibility in minutes with NO obligation.