Home Affordable Refinance Program:
What is the Home Affordable Refinance Program?
The Home Affordable Refinance Program, also known by its acronym HARP, is a federal program set up specifically by the Federal Housing Finance Agency in March of 2009. The program was set up to help home owners who were classified as “underwater” or “near underwater” states in their mortgages. The term underwater is a reference to real estate that has a negative equity compared to the money still owed on the loan. The Home Affordable Refinance Program is somewhat similar to the Home Affordable Modification Program, also known as HAMP. Where Home Affordable Refinance Program focuses on homeowners whom are caught up with their payments, the Home Affordable Modification Program is specifically for individuals under the threat of foreclosure.
How Does the Home Affordable Refinance Program Work?
After being created in March of 2009, it was decided that the program should assist individuals who were experiencing excessive loan to value ratio rates. Specifically lowered to any percentage over 80% percent, from the original loan to value ratio of 105% and was raised so that individuals up to 125% could also benefit from the refinancing option without having to purchase mortgage insurance. This enabled homeowners to lock in lower interest rates. There is however still some qualifying criteria including:
- The mortgage in question must be owned / guaranteed by either Freddie Mac or Fannie Mae, which may require some finding out as neither agency deals directly with the public
- The mortgage must have been acquired either on the month of March in 2009 or beforehand
- The homeowner must not have had a previous HARP refinance, unless said refinance happens during an authorized period between March and May of 2009
- The homeowner must be current on mortgage payments with no late payments in the last six months, as well as no more than one late payment in the last year
- The current loan to value ratio must be greater then eighty percent
- The homeowner must benefit from the loan by either lower monthly payments or movement to a more stable interest type ( typically adjustable rate to fixed rate )