The Home Affordable Refinance Program (HARP) has reached over 2 million people in four years. However it is not reaching as many U.S. homeowners as it should. There are a couple reasons for that. The program may be too restrictive, so too few people qualify. The second is that too few people may be applying for the program.
The government launched this program in 2009 and it was for homeowners that had a mortgage from before June 2009 that was backed by Fannie Mae or Freddie Mac, with a strong mortgage payment history and a loan to value under 125%. HARP 2.0 was released with changes -the 125% limit was gone and the lender liability clause was removed. This allowed more homeowners to qualify.
There are several misconceptions that are keeping people from applying for a HARP loan.
- You can't refinance with a second mortgage. Yes, you can refinance with a 2nd mortgage, however you can not pay it off and combine it with the first mortgage. You will need to subordinate the mortgage behind your new first mortgage and the terms of the second mortgage won't change.
- I was already turned down for a HARP loan. It makes sense to talk to another lender. Many lenders have individual overlays that may affect what you can qualify for. Talk to another lender to see if you can qualify. There may have been some changes to your personal situation or there may have been a possible program change that would allow you to qualify now.
- I have no equity in my home. HARP loans will allow you to refinance without any equity. That is what this program was designed for.
- This is not my primary home. HARP loans can be used for investment properties and second homes.
- I can't use a HARP loan as I am not behind on my payments. HARP loans are for those that are current on their mortgages. It is not designed for those that are behind in their payments.
- I can't use a HARP loan as my lender doesn't offer it. Not all lenders offer HARP loans, but you do not need to stay with your current lender. You can work with a different lender that does offer a HARP loan.
- I have private mortgage insurance. You can still refinance a HARP loan with mortgage insurance. Not all lenders offer it and so you may need to shop around a little. This is one of the changes with HARP 2.o – you can now refinance those loans that have PMI.
If you aren't sure if you can refinance your mortgage using a HARP loan, talk to your lender and find out what your options are. Interest rates have increased but it may still be worthwhile checking out what your options are. Home prices have also increased, so it may be easier to refinance now as you may have more equity than you did a year ago. There may be more changes to the HARP program coming and if so, I'll let you know.