You Don't Know HARP

True or False:

Homeowners with loan-to-value ratios over 125% can’t refinance with HARP.
Only your existing mortgage company can refinance your loan with HARP.
There are a lot of upfront out-of-pocket fees to get a HARP loan.

False…False…False…If you agreed with any of the statements above, it’s time to learn more about the government’s Home Affordable Refinance Program (HARP), designed to help eligible homeowners refinance—even if their home has lost value or they have little or no equity.

Meet HARP 2.0

First announced in 2009, HARP picked up steam with lenders and homeowners when updates were announced in 2012 enabling homeowners to:

  • Refinance at a lower rate to reduce payments and/or the term of the loan—even if they owe more than the value of their home.
  • Work with any mortgage company that offers HARP to refinance their mortgage.
  • Refinance with no added costs.

During the first six months of 2012, when the HARP 2.0 changes took effect, over 400,000 homeowners obtained HARP loans, making up a third of the 1.5 million homeowners who have been helped since the program’s inception.

“HARP 2.0 introduced significant changes to help credit-worthy homeowners,” says John Butler, senior vice president of originations for Nationstar Mortgage based in Lewisville, Texas. “To qualify, applicants must be current on their existing loan, so interested homeowners need to keep up payments and apply soon,” he adds.

Nationstar is just one mortgage company actively reaching out to homeowners to encourage HARP refinances. Search for a HARP lender.

Beating the Buzzer

Fannie Mae estimates many homeowners with Fannie Mae loans could be helped with HARP, but as of January 2013 few have reached out to their mortgage company to get the process started, according to Robert Greenbaum, a senior marketing director at Washington, DC-based Fannie Mae. Greenbaum notes that homeowners who refinance with HARP could save hundreds of dollars, on average, per month on their mortgage payment.

What’s Stopping Homeowners?

It could be a mixture of misconceptions and outdated information, he says. Homeowners may have been turned down for a refinance under previous guidelines, or been told their mortgage company doesn’t handle HARP loans. They may not realize they can refinance their loan with any HARP lender and that updated program guidelines broaden eligibility requirements so it’s easier to qualify for refinancing with reduced upfront costs.

“HARP has changed, so even if you were told before that you couldn’t qualify, contact your mortgage company to find out if your situation has changed. And if your mortgage company doesn’t offer HARP, find one that does,” urges Greenbaum.

Time is Ticking

HARP loan applications are due by Dec. 31, 2013, he notes.*

With demand high and most lenders averaging four to five months’ processing time, homeowners who think they might qualify for HARP should take action now. “If HARP can lower your mortgage payment, improve your loan terms so you build equity faster, or improve your ability to pay over the long run, why wait?” asks Nationstar’s Butler.

Editor’s Note: HARP is currently offered only to homeowners whose loans are owned by Fannie Mae or Freddie Mac. If your loan is not owned by Fannie Mae or Freddie Mac, contact your mortgage company (the company listed on your monthly mortgage statement) to see if they have a similar program.

*As of May 2013, HARP’s deadline was extended to December 31. 2015. Even so, don’t wait to take advantage of this program if you think you may qualify!

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