HARP: What You Need to Know

Managing Your Mortgage, Mortgages
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Thinking Refinance? Help From HARP, HAMP Ends This Year

Falling behind on your mortgage can make you feel like you’re drowning. If you need a lifeline — in the form of a low-cost refinancing option — consider HARP, the Home Affordable Refinance Program.

What is HARP?

HARP is a federal mortgage refinancing program that provides relief to homeowners who are struggling to pay their mortgage due to unexpected financial hardships. The program will be available to homeowners through Sept. 30, 2017.

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

Bottom line: You should consider a HARP loan if…

  1. You have a solid history of on-time payments
  2. You owe more on your house than it is worth (you’re “upside-down” or “underwater”)
  3. You meet the other eligibility requirements listed below

» MORE: The best refinance lenders

Advantages of a HARP loan

A HARP loan:

  • Lowers your mortgage rate.
  • Shortens your loan term.
  • Transfers an adjustable-rate mortgage to a fixed-rate loan.
  • Bundles closing costs into the new loan.
  • Requires less paperwork than a traditional refinance, making the application process smoother.

Note also that no minimum credit score is required to qualify for a HARP loan, and closing costs (which come with all refinance loans) can be rolled into your new loan. So, you won’t have to worry about coming to the table with up-front cash.

HARP eligibility and requirements

With HARP, you have the ability to refinance your loan at a lower interest rate to allow more flexibility in your monthly budget.

To qualify, you have to meet very specific HARP eligibility requirements such as:

  • Your loan is underwater. 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%. A HARP refinance will include an appraisal to determine your home’s current value.
  • You make your payments on time. 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. If you have a past-due mortgage payment or a history of making late payments, you’ll have trouble qualifying for HARP. Make sure you haven’t made a payment more than 30 days late in the past six months and more than one late payment in the past year.
  • You had a previously declined application. You can’t get a HARP refinance more than once, but you might be eligible now if you were previously declined for the loan. With expanded eligibility, more people are able to benefit from HARP.
  • Your loan is owned or backed by Fannie Mae or Freddie Mac. Both organizations provide online and telephone loan-lookup options.
  • Your mortgage was originated on or before May 31, 2009. Also, the home must be your primary residence, a second home or an investment property.

If you don’t qualify for a HARP loan, review our guide to refinancing your mortgage to see if other avenues might make sense for you.

How to get help

To apply for a HARP loan, gather your financial and loan information, such as mortgage statements, including information on a second mortgage (if you have one), recent paystubs and your latest income tax return. You’ll need this documentation when you speak to a lender.

Call your lender to ask about refinancing through HARP, or contact a HARP-approved lender through Fannie Mae or Freddie Mac.

Updated Feb. 22, 2017. 

Deborah Kearns is a staff writer at NerdWallet, a personal finance website. Email: dkearns@nerdwallet.com. Twitter: @debbie_kearns.