The Home Affordable Refinance Program (HARP) was created in 2009 to help homeowners facing foreclosure or extreme debt by offering a refinance option with fewer requirements. The program is set to expire at the end of September 2017, but the Federal Housing Finance Agency estimated in June 2015 that more than 429,000 homeowners may still be eligible to refinance at the low rates offered. However, some wonder if they would truly benefit from a HARP mortgage.
There are a number of advantages to refinancing through HARP. The interest rates are either the same or below the rates homeowners would receive going through a conventional refinance. However, HARP has no minimum credit score, which means that a number of homeowners with damaged credit might qualify. Many can also get a shorter term on their loan or change their adjustable-rate mortgage into a fixed-rate loan, eliminating the chance that their rate will increase in the future. A maximum of four percent can be added to the loan to cover closing costs. Most HARP mortgages also require no appraisals, and many do not need mortgage insurance.
Overall, HARP has many benefits for those who qualify. However, to qualify, borrowers must have a mortgage that is backed by either Fannie Mae or Freddie Mac. The loan-to-value ratio must be at least 80 percent, and the property must either be the borrower’s primary residence, serve as a single unit second home, or serve as a one to four unit investment property.