The Home Affordable Refinance Program (HARP)

by Miranda Marquit, Contributor

Since the mortgage market meltdown in 2008, foreclosures have been a real concern for many. The government has made efforts to help with loan modification and with mortgage refinancing. Many people are aware of the possibility of loan modification, but there seems to be less knowledge of the “Home Affordable Refinance Program” (a.k.a. HARP).

For those who are not in immediate danger of foreclosure, the HAMP mortgage refinancing program can be helpful. It is designed to help those who have been responsible with their mortgages, but are looking for a way to reduce payments.

Mortgage Modification vs. Mortgage Refinancing

The HAMP refinance is not a loan modification ― it allows for borrowers to acquire a new home loan to replace the original mortgage. A mortgage loan modification, on the other hand, results in changes to the original terms of the home loan. Modification can result in lower payments, but it is not a new loan. Also note that the loan modification may not be permanent.

There are specific requirements in order to be eligible for the HAMP mortgage refinancing program. Some of the basic requirements include the following:

  • Primary residence: The home being refinanced must be the main home lived in by the applicant.
    Original mortgage prior to January 1, 2009: The most recent mortgages are ineligible for the Home Affordable Refinance Program. Your loan must have   been completed before the first of the year in 2009 to qualify for this mortgage financing program.
  • Be current on mortgage: In order to be eligible for HARP, applicants must be current on the last 12 months worth of mortgage payments.
  • Fannie and Freddie: Only mortgages backed by Fannie Mae or Freddie Mac qualify for this mortgage refinancing program.

If you meet the above requirements, it is possible to get a mortgage refinance for up to 125% the value of your home. Those who owe more than the market value of their homes are likely to benefit the most from HARP. Such borrowers are unlikely to qualify for regular mortgage refinancing, since many lenders want to see a substantial amount of equity before approving a refinance.

Before you engage in mortgage refinancing, it is a good idea to consider all of your options. Think about your goals and decide whether or not you can refinance to a lower interest rate or a shorter loan term.

Mortgage refinancing can help you save money in the long run. If you are interested in mortgage refinancing, but are having difficulty qualifying for a more traditional loan, it might be worth it to consider the Home Affordable Refinance Program.