What is HARP? HARP is the acronym for the Home Affordable Refinance Program, first established by Congress in 2009 then adjusted to fix a few things, quite a few actually, in 2011. HARP was first implemented to allow homeowners with a mortgage to refinance an existing loan into one with a lower rate or get out of an adjustable rate mortgage into a fixed. Why was HARP even needed? Because conventional mortgages need at least a 10 percent equity position before a loan is eligible to be refinanced. As rates begin to fall rather precipitously toward the latter part of the past decade, millions of homeowners refinanced. All except those with conventional mortgages and no equity.

As mortgage rates fell, so too did home values and without at least 10 percent in equity, millions of homeowners couldn’t take advantage of lower rates. As HARP was introduced, it was done with the idea that lower monthly payments would free up more monthly cash which could then be pumped back into the economy. Government-backed mortgages such as VA, FHA and USDA loans all have provisions allowing for a refinance without regard to the outstanding mortgage balance compared to the current value but conventional mortgages had no such provision. Conventional mortgages are those underwritten to guidelines established by Fannie Mae and Freddie Mac.

Even though the Fed recently raised interest rates for the first time since 2006, rates are still very near historic lows and there are those who can take advantage of getting a lower rate or getting out of an adjustable mortgage can still take advantage of HARP. There are still millions who may still be unaware they can in fact refinance their mortgage and lower their monthly payments.

There are some basic requirements to be HARP eligible but the very first is to make sure the loan is owned by either Fannie or Freddie. Remember, where you send your monthly mortgage payment is not necessarily the same who owns your loan. Both Fannie and Freddie allow you to enter in your name and property address on their website to see if they do own your mortgage. If they do, you’ve passed the first requirement. HARP approval is relatively easy, especially so since you don’t need an appraisal. Not requiring an appraisal means there are no loan-to-value issues. Those that are “upside down” with their mortgage, where the loan balance is higher than the current value can still refinance under this program. HARP applies to all mortgage loans dated no later than May 31, 2009 which was the time when the mortgage debacle was in full swing.

HARP guidelines also ask there be no more than one payment made in the last 12 months be no more than 30 days past the due date and no such late within the past six months. HARP is an ideal option for those who may have erroneously thought a refinance was out of reach due to valuation issues. Rates are still low and if you are curious about a HARP, it’s time to place a phone call to a mortgage lender to see if this program can work for you.

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