Home Affordable Refinance Program (HARP)

Fannie Mae and Freddy Mac Mortgages Can be Financed at Lower Loan Rates

A southwestern style home

Chances are that lately you’ve seen one or more recognizable actors pitching the benefits or refinancing your home with a government-sanctioned Home Affordable Refinance Program (HARP). Of course, they are representing whichever financial institution they represent.

But before you sign up for any particular re-financing plan, it’s a good idea to understand what the program is and how it works as the government defines it. In a nutshell, they say, “HARP is designed to help you get a new, more affordable, more stable mortgage.” Now, let’s have a look at the details.

Are You Eligible for HARP?

Good question; here are the criteria you must meet:

Your mortgage may not have refinanced under HARP before unless it’s a Fannie Mae loan that you refinanced under HARP from March-May, 2009.
Your mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae. Yes, those lovable dweebs that brought us our recent financial melt-down.
Your mortgage must have been sold to either Fannie Mae or Freddie Mac on or prior to May 31, 2009.
Your current loan-to-value (LTV) ratio must be greater than 80%.
You, as the borrower, must be current on your current mortgage at the time of the refinance, with a good payment history in the past 12 months.

Program Availability Concerns

Your current mortgage holder may or may not participate in HARP. If you already have a good business relationship with them that might be a good place to start. If not, it’s time to shop around.

Some lenders currently participating are CMG Financial, American First Credit Union, AimLoan.com, Cobalt Mortgage, New Penn Financial, LLC, and Quicken Loans. How long do you have to apply? The program ends December 31, 2015.

Reasons for Refinancing

Not everybody will benefit from mortgage loan refinancing, although many will. There are two main categories of homeowners who make the most likely candidates.

The first category is the resident with an adjustable-rate mortgage or subprime lending terms such as balloon payments and interest-only payments.
Residents in the second category are those who were saddled with high interest rates when they initially purchased their homes. Refinancing at current mortgage rates can automatically make those mortgage payments more affordable.

Some Caveats to Consider

The devil is in the details, as they say. Note that if your current mortgage requires you to carry private mortgage insurance (PMI) it is likely that that will not change simply by refinancing.

As of this writing, qualifying properties include primary residences, secondary residences, and multi-family properties with four or less units. This may change at any time, so be sure to find out.

Also, the balance on your first mortgage must be under 125% of your home’s current value.

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