How the Home Affordable Refinance Program (HARP) Can Help Home Owners

The Home Affordable Refinance Program, otherwise known as HARP, is a program designed by the Obama administration to support the weak housing market. It helps homeowners by ensuring their mortgage is affordable by allowing an owner to refinance at a lower interest rate. There are some very specific qualifications which must be met to be eligible. For those who do not qualify for the Home Affordable Refinance Program, there is also the Home Affordable Modification Program, otherwise known as HAMP, designed to help people with loan modifications.

Home Affordable Refinance Program Eligibility Requirements

Homeowners may be eligible for a refinance under the HARP if:

  • The loan on the property is owned or guaranteed by Fannie Mae or Freddie Mac.
  • They are current on their loan payments at the time of application. Current means the homeowners have not been more than 30 days late on a payment in the preceding 12 months. If the homeowners have owned the home less than 12 months, they must have never missed a payment.
  • The amount owed on the home's first lien does not exceed 125% of the home's current fair market value.
  • The homeowner has reasonable ability to make the payments under the new loan terms.
  • The new loan will significantly improve the long term affordability of the loan.

For homeowners who are not current on their mortgages, there may still be help under the Home Affordable Modification Program. Anyone who is behind will not generally qualify for the refinance program.

Finding Out if HARP Makes a Loan More Affordable

For those who want to know if refinancing under HARP will make the loan more affordable, the lender will provide a Truth in Lending statement or a "Good Faith Estimate" that will show the overall cost of the loan. Homeowners can compare this to their current loan scenario to determine what the savings will be.

Finding Out if a Loan is Owned or Guaranteed by Fannie Mae or Freddie Mac

For homeowners who are unsure of whether or not their mortgages are owned or guaranteed by either Fannie Mae or Freddie Mac, the best thing to do is to call the loan servicer and ask for details about the programs.

Both agencies have established toll free numbers and websites homeowners can use to determine if their loans are either owned or guaranteed by their agency.

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

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

Though the overall goal of the program is reduce monthly payments to make the mortgages more affordable, there are some loan programs, such as Interest Only, that may make it more difficult to see a reduction in monthly payments. Certain loan programs will cost more in the long term than a fixed loan, which is why it may take looking into the long term to see where the savings are.