Personal Insights

Financing a Home: What Is a HARP Loan?

If you owe as much or more on your home than its current market value, you may find there aren’t a lot of options when it comes to refinancing your mortgage. But don’t be discouraged. The Home Affordable Refinance Program – or HARP – is designed to help underwater homeowners get better mortgage terms.

“The HARP program gives homeowners who are underwater on their homes the opportunity to refinance and take advantage of lower interest rates,” says Lara H. Smith, part of Regions Mortgage Product Management and Credit Administration. “There are also very few eligibility requirements.”

Do You Meet the Eligibility Requirements for a HARP Loan?

“To be eligible for HARP, the most important requirement is that you’re making consistent payments on your current loan and that you’ve made every payment on time over the past six months,” Smith says. The HARP program allows you to have made one late payment over a 12-month period before you’re no longer eligible.

Additional eligibility requirements for HARP:

1. Freddie Mac or Fannie Mae owns your loan. If you’re not sure who owns your loan, use the HARP.gov loan look-up tool.
2. Your home is either your primary residence, a one-unit second home, or a one- to four-unit investment property.
3. Your loan was originated on or before May 31, 2009.
4. Your loan cannot have been refinanced under HARP previously, unless it’s a Fannie Mae loan that was refinanced under HARP from March to May 2009.
5. Your current loan-to-value ratio is greater than 80 percent.

Potential Benefits of a HARP Loan

HARP can help lower your mortgage interest rate, which will help reduce your payments. Homeowners who refinanced through HARP in 2014, for instance, saved an average of $179 per month on their mortgage payment, according to the Federal Housing Finance Agency.

HARP also can help you get a shorter term on your loan, which allows you to build equity faster and pay off your mortgage more quickly.

Where to Begin

It’s important to note that the deadline to get a HARP refinance is December 31, 2016. Once you’ve determined that you meet the program eligibility requirements, gather pertinent financial information, such as your mortgage statement and pay stubs, and contact your mortgage company to ask whether it’s a HARP-approved lender.

Being underwater on your home doesn’t mean you’re without options. If you meet the eligibility requirements, a HARP loan may be a good path for you.