The Home Affordable Refinance Program, or HARP, was first introduced in 2009 by Congress in an attempt to allow homeowners who were underwater on their property—owing more than the home was worth—to refinance their existing mortgage to one with a lower rate. This was made as an attempt to put more cash in consumers’ hands by lowering monthly obligations and by doing so, spending that extra cash somewhere in the economy.

The reason Congress had to step in concerns how traditional lenders evaluate a refinance application. A refinance is a brand new loan, it’s not simply an “adjustment” of an existing one. When someone decides to refinance a conventional mortgage, that borrower can go to any mortgage lender and doesn’t have to contact the current lender in order to refinance. Borrowers can shop around for the best rate and terms. However, refinancing an existing conventional loan does require equity in the property, a sort of “down payment” on a refinance. This equity must be at least 10 percent of the current market value of the home. For example, if the home is appraised at $100,000 then the newly refinanced mortgage may not exceed 90 percent of that amount, or $90,000 in this example.

That required equity positions stymied millions of homeowners who found they didn’t have that type of equity due to falling home values. HARP was introduced that allowed homeowners to refinance up to 125 percent of the current value of the home. And while that helped, there were millions more that were left on the sidelines because of the amount of the mortgage compared to the value. That’s when HARP 2.0 was introduced and removed the requirement for an appraisal altogether. This change meant it didn’t matter how much, if any, equity there was in the property, a refinance was still possible. Someone with a home valued at $100,000 could still qualify for a HARP 2.0 refinance even if amount borrowed was $150,000 or more! Further, HARP 2.0 isn’t just relegated to lowering a rate, but is also allowed when borrowers are refinancing an existing adjustable rate mortgage into a fixed rate loan.

Are you eligible? You might be if your current mortgage has been sold either to Fannie Mae or Freddie Mac. Both have a website that allows you to type in your name and property address to see if one of the two does in fact own your loan. You are also eligible if you are current on your mortgage with no payments made more than 30 days past the due date in the last six months and no more than one such late in the past 12 months. And finally, your current mortgage must have been made prior to June 1, 2009.

There are millions of homeowners who may have applied for the original HARP loan and didn’t qualify because of the 125 percent restriction, not knowing the new HARP 2.0 waives an appraisal entirely. If this is you and you’d like to refinance to a lower rate, it’s time to call a mortgage lender and ask about this program.

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