What is the HARP Program?

Published by Thomas Herold in Banking, Real Estate

'HARP Program' is explained in detail and with examples in the Real Estate edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

HARP stands for the Home Affordable Refinance Program. This program that the government sponsored entities Fannie Mae and Freddie Mac created and back is unique. It turns out to be the one refinancing program that works with borrowers who are eligible and who have no or little equity in their houses so that they can receive refinancing benefits and lower interest rates.

The HARP program has changed some over the years. One of the main improvements to the program was to get rid of the underwater limitation amount for home owners. There is now no restriction on how much more the borrowers owe on their mortgage than the property is actually worth.

Thanks to this modification in the HARP program, a great number of home owners who could not qualify before will now be able to do so. The program itself expires on September 30, 2017. This makes it important for buyers who are considering it to take action on it or get more information in the near future.

The HARP program is a good choice for those borrower who have maintained a successful payment history over the last 12 months. It does not require a perfect payment record. Over the last six months there can not be any late payments. From six to twelve months prior there can only be a single payment that is 30 days late. The loan must also be guaranteed by or owned by Freddie Mac or Fannie Mae.

In order to participate, there are several other considerations. The loan only can be modified with this HARP program if it is either the primary residence or a second house or investment property. It makes most sense if the value on the house has declined. It is especially useful for those whose first mortgage amount is greater than the present house market value or if there is little equity in the property. The loan will only qualify if borrowers closed on them before or on May 31, 2009. This information can be obtained with the loan lookup tool and results on the Fannie Mae or Freddie Mac websites.

There are a number of good reasons for borrowers who are not able to take advantage of other refinancing means to utilize the HARP program on their mortgage. It lowers the monthly payment after the process is complete. The refinance procedure also decreases the interest rate. This means that borrowers will save on interest as well as monthly payment amounts.

It can be especially beneficial for those who have adjustable rate mortgages. These HARP interest rates are fixed, which means they will not change with time. Lower interest rates and less interest also help the home owners to build up their equity faster. It is possible to get a refinanced mortgage with a shorter term as well. Because the program does not require any appraisals, this saves the home owners both money and time that it takes to find someone to perform them to most banks’ satisfaction.

Participating in the HARP program is not difficult. It requires that borrowers undergo an application process, receive approval, and finalize closing much like with the original mortgage. HARP lenders work with the home owners every step of the way and assist in deciding if the program meets the needs of the borrower. There may be closing costs associated with the refinance. These often can be rolled over into the new loan to reduce out of pocket costs as necessary.

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The term 'HARP Program' is included in the Real Estate edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.