A harp is a lovely stringed instrument. It’s also an acronym for a type of mortgage — through the Home Affordable Refinance Program. Overseen by the federal government, HARP has benefited homeowners since 2010, but it will soon expire on December 31, 2018. Here’s everything you need to know about HARP.
The HARP program was introduced by the Federal Housing Finance Agency in March 2009 — during the national economic crisis — to enable “borrowers with little or no equity to refinance into more affordable mortgages without new or additional mortgage insurance.” Typically, borrowers with little equity are not able to refinance to take advantage of lower interest rates without having to purchase private mortgage insurance — an expense that could, in some situations, negate the advantage of refinancing altogether.
In order to apply for HARP, the loan must be owned by Fannie Mae or Freddie Mac, the mortgage must have been originated on or before May 31, 2009, and borrowers must be current on their payments.
Fannie Mae is the common name for The Federal National Mortgage Association, a government-sponsored enterprise created by Congress; while Freddie Mac is the common name for The Federal Home Loan Mortgage Corporation, another government-sponsored enterprise created by Congress. According to Fannie Mae, millions of Americans have taken advantage of the program since its inception.
According to the government, a few advantages of the HARP program are that it can help borrowers lower their interest rate, obtain a shorter loan term, or change from an adjustable rate mortgage (ARM) to a fixed-rate mortgage. There’s also no minimum credit score needed, according to the HARP website.
One disadvantage to HARP loans is that you can only get one per property. So, if you get a HARP loan to begin with, you can’t refinance to another one later.
The government program is scheduled to expire on December 31, 2018. If think you are eligible and might want to apply for a HARP loan, you should act quickly. Contact the mortgage experts at Mr. Cooper to explore your options.