Underwater Mortgage? Refinance Soon, HARP Expires End of 2016!

September 9th, 2016

Interest rate


The Home Affordable Refinance Program (HARP) is a mortgage assistance program, set up by the Federal Housing Finance Agency in March 2009 to help underwater and near-underwater homeowners refinance their mortgages.

After the housing market crash in 2009 many homeowners were faced with a situation where their house was considered “underwater”. In this scenario, the house value was less than the mortgage loan cost, in other words, having a negative equity value in the home. Refinancing was not an option, nor was selling the home unless they paid the lender for the difference. Unfortunately, this lead many homeowners into foreclosure.

Since then, homeowners have more options, like HARP. If you have little to no equity in your home, HARP may be able to help you acquire a better mortgage rate. These HARP loans allow for people to refinance their mortgage. This type of loan does not have the equity/loan-to-value requirements that are usually required on normal loans.

What Are the Requirements for HARP?

You can see if your loan is eligible by clicking on the below links. According to HARP you may qualify if you meet all the following criteria:

  • Your mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae. Click on the following links to see if your loan is eligible on the Fannie Mae Loan Lookup or Freddie Mac Loan Lookup.
  • The mortgage loan must have been originated on or before May 31, 2009.
  • The current loan-to-value (LTV) ratio must be more than 80%. Use Bankrate.com’s loan-to-value ratio calculator to determine your LTV. There is no maximum LTV limit on fixed-rate mortgages, but there is a 105% limit on adjustable-rate mortgages.
  • Be current on your mortgage payments. You might not qualify if you were more than 30-days late on payments in the last six months or had more than one late payment in the past 12 months.

Not only does the loan need to be on one of the lists, you cannot have done a HARP loan in the past. If you meet the requirements above, schedule a call with me to ask about refinancing using HARP. The goal is to get you a lower and more affordable rate, even if your place is not worth what you owe on it.

Which Loans Do Not Qualify for HARP?

  • FHA loans
  • Jumbo loans
  • USDA loans
  • VA loans

Fortunately, there are programs and guidelines for people who are underwater with FHA, USDA, and VA. Click on the links to see what is available for each mortgage type.

Is HARP a Loan Modification?

HARP is a refinance program and thus is not considered a loan modification. Loan modifications or mortgage modifications pertains to when you make any changes to your existing mortgage loan. Refinancing replaces the original loan with new terms and better interest rates.

How Do I Apply for HARP?

Once you see if your loan is from Fannie Mae or Freddie Mac contact a mortgage lender for a refinance rate quote. In the comment section, mention that you are interested in HARP. Shop around for a good interest rate and consider a lender that is knowledgeable about the program.

Read Top 15 Questions to Ask A Mortgage Lender

HARP is not intended to save people from foreclosure, but to help homeowners get a better interest rate through refinancing.

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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