The Home Affordable Refinance Program (HARP) is a federal program designed to help homeowners refinance into a lower rate. You can qualify for the refinance program even if you have little equity or you are underwater on your mortgage.
As long as you are not behind on your mortgage payments, you can be eligible for a HARP refinance -- even if your home is worth less than you owe.
This popular program is sometimes called the Obama Mortgage or Obama Refinance Program, as it was made into law by the Obama Administration in 2009.
If you hope to refinance your mortgage into a lower rate through the HARP program, you need to meet these eligibility requirements:
There are many benefits to a HARP refinance. You can qualify for the program even if you have a second mortgage or you are underwater. The program does not have a maximum loan-to-value ratio, and you will not need to pay for mortgage insurance unless you already have PMI on your mortgage.
Homeowners with a large mortgage with a rate well above current rates (such as 6-8%) experience the greatest benefit from the program.
A HARP refinance loan does come with closing costs which can be financed into your new mortgage with limits. If you have a Fannie Mae loan, you can only roll 4% of our original balance in closing costs into the new loan. With Freddie Mac loans, you can add up to $5,000 or 5% to your new balance. Any closing costs that exceed these caps must be paid out of pocket.
It is not necessary to use your original lender to refinance your mortgage through the HARP program. Most mortgage servicers participate in the program, but keep in mind that closing costs and rates will vary by lender, so it is important to compare refinance quotes.