Home Affordable Refinance Program (HARP)

The Home Affordable Refinance Program gives borrowers with loans owned or guaranteed by Fannie Mae or Freddie Mac an opportunity to refinance into more affordable monthly payments. This program was recently extended and now expires on December 31, 2013.  The eligibility requirements have also been changed to make it easier for more homeowners to take advantage of this program (big thanks to follower Sara for reminding me to point this out).

To be eligible for HARP, a borrower must:

1. Have a mortgage loan secured by the borrower's principal residence or former principal residence;
2. Have a loan that is owned or guaranteed by Fannie Mae or Freddie Mac and sold to those agencies on or before May 31, 2009;
3. Have sufficient income to pay the new mortgage payment;
4. Be current on the mortgage with no missed payments in the last 6 months and no more than one missed payment within the last 12 months;
5. Have not previously refinanced the mortgage under HARP; and
6. The current loan-to-value (LTV) ratio must be greater than 80%.

Lenders may have other criteria depending on whether you want a fixed or variable rate.  To apply, contact your mortgage servicer or any other lender who participates in the program, and ask for a HARP application. To speed up the application process, you should gather the following information and documents before you call:

o    Information about the monthly gross income of all the borrowers on your loan, including recent pay stubs if you receive them, or documentation of income you receive from other sources;

o    Your most recent tax return;

o    Information about any junior lien mortgage on the home;

o    Account balances and minimum monthly payments due on all of your credit cards; and

o    Account balances and monthly payments on all other debts (student loans, car loans, etc.)

Homeowners with mortgage interest rates higher than the current market rate should see a reduction in their payments. Homeowners that are paying interest only, or who have a low introductory rate that will increase in the future, or who face a balloon payment may not see their current payment go down if they refinance to a fixed rate and payment. These homeowners, however, could save money by reducing the amount of interest they will pay over the life of the loan.

Refinancing into a more stable fixed-rate loan product and avoiding future mortgage payment increases will likely improve a homeowner’s ability to sustain their mortgage payments over the long-term.  If eligible for the program, your lender will give you a "Good Faith Estimate" and a "Truth in Lending Statement" that shows the new interest rate, mortgage payment, and the amount that will be paid over the life of the loan.  If the new loan terms are not better than your current loan terms, a refinancing may not be the right option for you.

Both Fannie Mae and Freddie Mac have toll-free telephone numbers and web submission sites that allow homeowners to find out if either agency owns or guarantees their loan.  For more information, go to:

For Fannie Mae:
1-800-7FANNIE (8am to 8pm EST)
www.fanniemae.com/loanlookup

For Freddie Mac:
1-800-FREDDIE (8am to 8pm EST)
www.freddiemac.com/mymortgage