Harp program

Also referred to as Obama Refinance Program, HARP or the Home Affordable Refinance Program is a program backed by the government to assist homeowners who may find their applications for mortgage refinance getting declined without it. This program was launched by the federal government to combat the home price collapse after the 2007-08 financial and housing crisis.

HARP is most likely to benefit those homeowners whose homes have a market value that is less than the remaining balance on their mortgage (called negative equity) or they have just a small quantity of positive home equity. Minimum credit score limits are also not there.

After the 2008 crisis, the reduced prices of homes caused millions of homeowners to sink into negative equity which prevented them from decreasing their monthly payments by lowering mortgage rates via refinancing. As of 2018, the prices of homes have risen but such increase in prices has been geographically erratic.

From the time of its launch, HARP has undergone many changes and so have its eligibility requirements and other facets. Presented below are some of the advantages of the program.

• It is flexible: The state of current mortgage does not matter or is not taken into consideration in HARP
• There are reduced restrictions: As compared to other kinds of mortgages, the criteria for lending are far less restrictive and more lenient. Thus, the chances of approval are really high.
• Refinancing is more affordable: There is a cap on a lot of charges and fees. Thus, closing costs for refinance is more affordable. Also, homeowners can bundle the fees, etc., within the new refinanced loan.
• Lots of savings: Payments for mortgage insurance in HARP are usually the same as the one that homeowners currently have/had.

Mentioned below are some eligibility criteria for HARP:

• One of the most important criteria is that the current mortgage has to be guaranteed or owned by Fannie Mae or Freddie Mac. The chances of this being the case are more than not as in most cases the original lender often sells off the mortgage without informing the homeowners. The final ownership of the mortgage cannot be ascertained just by knowing the bank/company that you pay your monthly mortgage payments to. You can visit the websites of Fannie and Freddie and use the lookup tools at both the places to verify whether or not your mortgage is guaranteed or owned by either of them.
• The loan-to-value ratio (LTV) has to be equal to or more than 80%. Thus, homeowners with lots of equity get excluded from HARP and the program ends up assisting those who require it.
• The current mortgage should have been taken out on or before 31^st May 2009.
• The mortgage payments have to be up to date. There should be no late payments of over 30 days in the past 6-months period. Also, there should be not more than 1 late payment of over 30 days in the past one year.
• Mortgage refinance via HARP is available only for the primary home, or a second single-unit residence dwelling, or a 1-to-4 residential unit investment property.