HARP – Home Affordable Refinance Program allows you to get the best and lowest mortgage rates through Obama Refinance Assistance.
The Making Home Affordable Refinance Program, now known as the Home Affordable Refinance Program – HARP, is the mortgage refinance assistance portion of the Making Home Affordable Plan which was created as a Government effort to help homeowners reduce mortgage payments and make home affordable.
About Obama Refinance Assistance
Who and What is This Program For?
The plan is specifically for homeowners with a with a Freddie or Fannie mortgage who want to lower mortgage rates by refinancing.
If you have a Fannie Mae or Freddie Mac held mortgage and can no longer afford your home mortgage payments because of a financial hardship then HARP may be a program that can provide the mortgage relief you need to make home affordable.
If you, or any homeowner, want to refinance into a lower interest mortgage, or perhaps get rid of an existing adjustable rate mortgage, and obtain a safer fixed rate mortgage then this program is the answer.
As long as a homeowner meets a few qualifications the homeowner will be eligible to refinance through Obama’s refinance assistance program.
HARP Program Qualifications
Here is the simple version. I will explain each one in detail after the simple eligibility qualification list.
- Current Loan Originated Before 5/31/2009
- Your Home can be Described by one of the Following:
- Your Primary Residence
- 1 Unit Second Home
- 1-4 Unit Investment Property
- You are Up to Date on Payments
- No 30 day plus Late Payments in Last 6 Months
- No More than 1 30 day plus late payment in last Year
- Loan is Owned by Freddie MAC or Fannie MAE
- Loan to Value (LTV) is greater than 80%
Qualification Help, Details, and Explanations of the Eligibility Requirements for Obama Refinance Assistance
Here I decided to provide some useful guidance and detailed explanations on the qualifications a homeowner must meet in order to gain eligibility. Also I have provided further tools and resources as they are applicable.
- Mortgage Origination Before June 2009
The mortgage loan must have an origination date prior to 5/31/2009. This program is to help with the troubled loans from the housing bubble era. Everyone is suppose to have known better after the bubble went boom (perhaps it was more of a bomb then a bubble).
- Property Use to Borrower
This program is designed for typical US Homeowners. The program has been nice enough to expand the eligibility to those with 2nd homes and to those with a smaller 1-4 unit investment property. But you are not going to be able to refinance Apartment building loans. Nor will you have much luck refinancing 22 balloon mortgages you cosigned on with 4 of your golfing buddies.
- Current on Mortgage Payments
The Obama refinance is designed for responsible borrowers who were able to maintain payments on their home loan. This is not a program used to stop foreclosure before you lose your home next month. If you are late on your mortgage or you are already in foreclosure you should look into a different form of mortgage help such as loan modification.
Lenders will not lend to folks who are in mortgage default. That is just bad business.
Responsible borrowers should still have the funds to pay their mortgage payments even if their was some sort of hardship due to the economic crisis.
I thought it was nice to see that they allowed for one late payment over the last year. I think this was a wise and gracious mover by program officials.
If you are in foreclosure and have been offered a loan from someone we strongly urge you to use caution and read over some information on hard money loans.
- Loan to Value Greater than 80%
Like other qualifications the LTV requirements have danced around a bit. Now loans with principals of at least 80% of the home’s value our exclusively eligible. Any loan below that should be able to be refinanced anyways.
- Fannie MAE or Freddie MAC Held Mortgage
Only Homeowners with a Fannie Mae or Freddie Mac owned mortgage may take advantage of this refinance opportunity. This means that if one of the government sponsored mortgage giants do not own or back your mortgage then you are automatically disqualified from the refinance assistance portion of the Making Home Affordable Plan.
How to Apply for HARP Refinance
Now that you have learned all you could ever want to know about the borrower qualifications let’s take a look at a step by step guide outlining how to apply for Obama refinance assistance.
- Understand What You are Applying for, and More Importantly, Who You are Applying With
The HARP application steps are not quite as straightforward as they are with HAMP. This is because you are really just applying for a refinance with the added advantage of having a special backing by Fannie or Freddie (given that you meet the program qualifications). Your loan is not coming from some special Government mortgage refinancing fund. It comes from a regular mortgage lender.
To further clarify let me try to say that another way. Just because you meet these qualifications doesn’t mean you will get a loan for sure. You still have to get a lender to say yes to loaning you their money, and they have to agree that you qualify.
It use to be much harder to get approval for the Obama refinance. In recent years, after the program updates of HARP 2.0, everything became more lenient with less paperwork and qualifications.
But again the lenders can add their own “layover” qualifications as they did originally. Despite the lender’s right to add on the extra qualifications as they use to, they have relaxed layover requirements. Most Obama refinance lenders have done away with layover qualifications all together. Especially the bigger banks. At one time many lenders had credit score requirements, LTV requirements, and even their own property restrictions. Most of this behavior has disappeared.
So just because one lender may reject you, that does not mean you don’t qualify nor that another lender won’t say yes. If you get declined by one bank try another. Especially if you got declined before 2014.
- Review and Familiarize Yourself with the Making Home Affordable Plan
We don’t want to sound like a broken record but it is very important that homeowners have a reasonable perspective. This means you should be familiar with the many homeowner assistance programs that are offered through the Obama Mortgage Assistance Plan. By doing so you will also become familiar with the general qualifications for HARP Program eligibility which is essential for the next step.
- Determine Preliminary Eligibility
HARP has some basic qualifications that a homeowner must meet in order to qualify for refinance assistance. You should already be familiar with them in detail if you read this article from the beginning. Otherwise just scroll up to find them.
- Confirm You Will Benefit from a Refinancing
If you’re not sure of how to figure this out for sure you can use our simple but effective HARP benefit analysis test. Which is much more simple than the name I made up for it. All you have to do is ask yourself two questions. If the answer is yes to both questions then you will definitely benefit from the Obama refinance program. If the answer is no to one you probably will not benefit if the answer is no to both then you should probably read another post on my finance blog (lol).
The Two Question HARP Program Benefit Test
- Is your current mortgage loan balance greater than $53,000?
If so then you should have a big enough balance where a rate reduction will create big enough savings to justify the fees, headaches, and personal time it takes to refinance through this program.
- Is your current interest rate 1.5% or more above today’s average mortgage rate?
If your rate on your current mortgage is half a point or so than it probably isn’t worth the hassle and expense involved. Right now (Sep 2016) average 30 yr fixed home loan rates are right around 3.2-3.3%. This program is only available for another year. It ends in Oct/Nov of 2017. Thus mortgage rates probably wont move to much from now till then.
- Gather Your Personal Financial Documents
Different lenders have different document and application requirements. But you will certainly have to provide short term and long term proof of income. This means up to 3 months of pay stubs and bank account summarys for the short term (if you have multiple forms of income try to have proof of the last 3 months and the last month at a minimum for all streams of income). For long term proof they will want to see tax returns. Most likely they will want to see the last two years worth.
Also your current mortgage information as well as info on any other liens against the house such as 2nd mortgages and any lines of credit backed by home equity. Try to have all documents pertaining to these loans for the last 3 months and you should have more then adequate mortgage loan documentation for the harp program application process.
- Choose, Contact, and Interview HARP Approved Lenders and Make Your Choice
Now it’s time to do some bank and lender shopping. You are searching for the lowest rates of lenders who approve you as an eligible Obama refinance borrower.
- Apply for a Obama mortgage refinance with Your Bank
Chose the best bank or lender who declares you harp program eligible and officially apply.
- Close on Approved Refinance Offer or Apply with Another Lender if Denied
Wait for an answer to your request. If you are approved; congratulations! Sign and move forward with refinancing. If for some reason you were not approved inquire to how they came to that conclusion. Then apply again at least one other lender.
We want all homeowners to remember that obtaining a mortgage refinance is not easy in today’s market. It can even be challenging for qualifying homeowners to obtain Obama refinance help. We urge you to also check out the Obama Loan Modification Program as well as the other mortgage solutions that are available to homeowners.
This refinance program is set to expire in September of 2017. However, two new programs similar in nature and purpose from Freddie Mac and Fannie Mae are set to replace the Obama refinance program. These are High Loan to Value Refinance Assistance Programs.