HARP: The Final Countdown to Savings

The End typed on paper with a typewriter

Really, this time the government means it! The Home Affordable Refinance Program® (better known as HARP) will now end Sept. 30, 2017. It had been scheduled to expire, along with all the flashing Internet ads harping on its attractiveness at year end. The program has already earned a number of extensions, but it will be replaced—for real this time—on Oct. 1, 2017, by a new and permanent refinancing program.

Why Should You Care?

If you are among the more than 300,000 homeowners who still qualify for HARP refinancing, you could be paying more for your home's current mortgage then you need to. Interest rates are much lower today than when HARP-eligible mortgages were made. So, refinancing under HARP typically results in a lower monthly payment depending on the term of the new mortgage.

The program is also very understanding of any changes that may have occurred in your financial circumstances since your mortgage was made. For instance, if your household salary has declined since you took out your current mortgage, your credit rating has dropped, or you've had a bankruptcy, refinancing under HARP is still an option that could lower your monthly payments, making it easier to stay in your home.

The terms of the loan can also be changed to your advantage. If you are currently in an adjustable-rate product, you can take advantage of today's low rates to lock into a fixed-rate mortgage before interest rates rise again. You also have the option of changing the maturity of your loan from 30 years to 15 years so you may be able to pay off your home sooner. You can also choose to lengthen the loan, if lower monthly payments would be of benefit in the near term.

Another advantage to refinancing under HARP is that there is no penalty for having low home equity. You can still refinance without triggering the added expense of Private Mortgage Insurance (PMI).

Sound Too Good to Be True?

The HARP program is both good for homeowners and true. Better yet, since the program was introduced, it has become easier to qualify for HARP. Even if you looked into HARP several years ago, it pays to check your qualifications again.

Qualifying Essentials

Here are the basic requirements for qualification under HARP:

  • You have a conventional mortgage that closed prior to May 29, 2009.
  • Your mortgage is held by Fannie Mae or Freddie Mac.
  • The mortgage is on your primary residence, vacation home or an investment property.
  • The value of your home has declined and your loan-to-market value is greater than 80 percent.
  • You haven't had more than one late payment in the last 12 months, and no late payments in the last six months.

Your Loan Officer can verify whether or not you qualify and also run comparison numbers to help determine what your savings will be over the life of a new HARP mortgage. They can also make sure there aren't any other programs available that may be even more beneficial given your current circumstances.

If you're like most people, you bought your home to realize a dream and to build equity in something that is your own. If homeownership hasn't quite delivered on your expectations so far, HARP may help you get that dream back on track.

How low will your payment be?