The Home Affordable Refinance Program (HARP) is a government-sponsored program, designed to help refinance conventional loans only. HARP was started in April 2009, giving homeowners a way to refinance their high interest, sometimes “underwater” mortgages.
HARP Relief Refinance Eligibility
- Your mortgage loan must be owned or guaranteed by Fannie Mae or Freddie Mac:
- Your 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 – the only exception being a Fannie Mae loan that was refinanced under HARP from March-May 2009.
- The current loan-to-value ratio (LTV) must be greater than 80%.
- You must be current on your mortgage at the time of the refinance, with a good payment history for the past 12 months.
The above are the basic eligibility requirements. Be aware that most lenders have added guidelines, such as requiring a minimum 620 credit score, or allowing a maximum loan-to-value of 125%.
What’s great about the HARP Relief Refinance
A HARP Relief Refinance will not require you to pay mortgage insurance if you are not currently paying one. If you already have mortgage insurance, then it will be transferred onto the new loan, with no change in cost.
No home appraisal is necessary – for this purpose lenders use AVM, an “automated valuation model”. A $75 waiver fee might be charged.
While the lender may require income verification just to verify you have some source of income, you do not have to “income qualify”.
HARP refinance is not limited to primary residences. It can be used to refinance vacation homes, second homes, and investment properties.
If money is tight, closing costs can be “rolled” into your principal balance.
HARP Relief Refinance drawbacks
The HARP refinance can only be used once, and only to refinance conventional/conforming mortgages. The amount of the mortgage cannot exceed conforming loan limits, which are at $453,100 for most of the U.S. States.
Cash-out transactions are prohibited.
Consolidating a second mortgage is not allowed. This means that if for some reason the second mortgage refuses to subordinate, the refinance does not happen.
There are no exceptions to “before May 31,2009”. Booooo!
The HARP refinance is still unavailable to subprime and ALT-A mortgages – see my blog post on Why we need HARP 3.0.
Not all lenders are HARP approved. If your current mortgage company says they can’t do it, it doesn’t mean someone else can’t. Always ask for a second opinion.