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HARP: What You Need to Know

The Home Affordable Refinance Program (HARP) expired at the end of 2018, but homeowners who owe more than their homes are worth may have other refi options.
Dec. 17, 2019
Managing Your Mortgage, Mortgages
HARP Mortgage Refinance: What You Need to Know
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Editor’s note: The HARP program, designed to help homeowners who owed more than their homes were worth, expired Dec. 31, 2018. Fannie Mae’s High Loan-to-Value Refinance Option and Freddie Mac’s Enhanced Relief Refinance replace HARP.

If you’re ineligible for the Fannie or Freddie options, you may still be able to refinance with an FHA Streamline Refinance or a standard refinance.

» MORE: Explore the new Fannie, Freddie refinance options.

What is HARP?

HARP was a federal mortgage refinancing program that provided relief to homeowners who struggled to pay their mortgage due to unexpected financial hardships. The program expired Dec. 31, 2018.

Created in 2009 in response to the housing downturn, HARP helped more than 3.4 million borrowers reduce their monthly mortgage payments, according to the Federal Housing Finance Agency, which administered the program.

Bottom line: HARP was available for people who…

  1. Had a solid history of on-time payments.
  2. Owed more on their house than it was worth (“upside-down” or “underwater”).
  3. Met a few other eligibility requirements.

» MORE: Best refinance lenders

Advantages of a HARP loan

A HARP loan:

  • Lowered the mortgage rate.
  • Could shorten the loan term.
  • Could replace an adjustable-rate mortgage with a fixed-rate loan.
  • Bundled closing costs into the new loan.
  • Required less paperwork than a traditional refinance, making the application process smoother.

No minimum credit score was required to qualify for a HARP loan, and closing costs (which come with all refinance loans) could be rolled into the new loan. Borrowers didn’t have to go to the table with up-front cash.

HARP eligibility and requirements

With HARP, borrowers had the ability to refinance at lower interest rates to allow more flexibility in monthly budgets.

The goal of a HARP loan is to help make your monthly payments more affordable, but you have to demonstrate you are capable of paying your loan on time.

To qualify, borrowers had to meet HARP eligibility requirements such as:

    • An underwater loan. An “underwater” mortgage is when you owe more on your mortgage than your house is worth. Another measurement of an at-risk mortgage is if your current loan-to-value ratio is above 80%. HARP refinances included an appraisal to determine your home’s current value.

» MORE: Estimate your current home value

  • On-time payments. The goal of a HARP loan was to help make monthly payments more affordable, but borrowers had to demonstrate that they had been making their payments on time. They had to have no payments more than 30 days late in the past six months and no more than one late payment in the past 12 months.
  • A loan owned or backed by Fannie Mae or Freddie Mac. Both organizations provide online and telephone loan-lookup options.
  • A mortgage that was originated on or before May 31, 2009. Also, the home had to be the primary residence, a second home or an investment property.

Review NerdWallet’s guide to refinancing your mortgage to see if other avenues might make sense for you.