What is a HARP Loan?

picture of couple sitting on front porchWhat is a HARP Loan? Learn the ins and outs of what it is, who is eligible and how you can take advantage. Visit Regions Bank today.

The Home Affordable Refinance Program, also referred to as "HARP," helps homeowners refinance their mortgage who otherwise might not qualify. If you're current on your mortgage payments, but your home's value has fallen to a point where you owe more than your home is worth, this program may help.

Current market conditions hit home values especially hard. And, many responsible homeowners have been unable to get traditional refinancing. HARP is designed to help by providing eligible homeowners with more affordable, stable mortgages.

The Home Affordable Refinance Program is part of the federal government's "Making Home Affordable" initiative. According to President Obama, the goal of HARP is "to provide access to low-cost refinancing for responsible homeowners suffering from falling home prices."

By refinancing, responsible homeowners may improve their financial positioning. The Home Affordable Refinance Program can help reduce your monthly principal and interest payments. Or, you may be able to move from a riskier loan, like an interest-only or short-term adjustable rate mortgage (ARM) into a more stable, fixed-rate loan.

Recent Home Affordable Refinance Program Enhancements

This past October 2011, Freddie Mac and Fannie Mae made changes to the Home Affordable Refinance Program. Basically, the enhancements make it easier for lenders to refinance the mortgages of eligible borrowers.

Current eligibility qualifications include the following:

  • Your mortgage must be owned or guaranteed by either Freddie Mac or Fannie Mae. To determine if your mortgage is owned by either of these Government-Sponsored Enterprises (GSE), you can visit their websites and use their loan lookup tool, or call their toll free numbers.

    If you determine Freddie Mac or Fannie Mae own your mortgage, you need to make sure it was sold to either GSE on or before May 31, 2009. In addition, your mortgage must not have been previously refinanced under the Home Affordable Refinance Program. The exception to this rule involves Fannie Mae loans refinanced under HARP between March and May 2009.

  • Loan-to-Value Ratios (LTV). The recent enhancements have an unlimited maximum Loan-to-Value ratio.

  • Payment Status and History. When you apply for a refinance under the Home Affordable Refinance Program, you must be current on your mortgage payments. In addition, you cannot have had any late payments in the six months prior to your application. And, you can have no more than one late payment in the previous seven to 12 months.

For complete details on the Home Affordable Refinance Program details, you should contact your mortgage servicer or another lender approved by Fannie Mae or Freddie Mac. You should also know you do not have to refinance with your current servicer. You are free to work with any mortgage lender as long as they participate in HARP. Not all servicers participate in the Home Affordable Refinance Program.

Finally, HARP loans require a loan application and underwriting process. When calculating your fees, it's important to make sure that your closing costs do not exceed the savings you'll realize through refinancing. So, even though you're taking advantage of HARP, it's important to compare rates and costs among different mortgage lenders to make sure you get the best terms.

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This information is general in nature, is provided for educational purposes only, and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. Regions neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.