Mortgages Made Simple

Harp Refinancing Explained

An estimated 11 million homeowners are underwater. This negative equity amounts to roughly $4 trillion.

While other government programs help households stay out of foreclosure, a HARP refinance is ideal if you are current on your loan but looking to rework it. A HARP mortgage refinance can help you lower monthly payments, saving thousands of dollars each year. 

Here is the criteria to qualify for a HARP loan:

•    You must be current on your mortgage payments
•    The loan must be owned by Fannie Mae or Freddie Mac
•    Fannie and Freddie must have taken on the loan before May 31, 2009
•    The mortgage was not already refinanced under the prior HARP program
•    The loan-to-value ratio must be more than 80 percent
•    You must demonstrate a strong payment history for the past 12 months

Changes with HARP in 2012: 

The rules and regulations of the HARP mortgage program have changed since its inception in order to make it easier to use. Originally, to get a HARP mortgage, you could not have an LTV above 125 percent. 

With the current HARP  program, that 125 percent cap has been removed. Only the 80 percent minimum remains.   You may also be able to get a HARP mortgage without an appraisal. As part of the updated HARP program, you may not need a new property appraisal as long as Fannie Mae or Freddie Mac can use an automated valuation model to estimate the home's value. This saves you time and money compared to a full appraisal.
Figure your LTV

To find out your LTV for HARP refinancing, divide the outstanding balance of your mortgage by the current estimated value of your home and multiply it by 100 to get your LTV %.  Be aware that this will change slightly as the final payoff figure of your current mortgage will change.  

Example:    Current mortgage balance is $143,500 and the present estimated value of the home is $125,000.

$143,500 ÷ $125,000 = 1.148
1.148 * 100 = 114.8% LTV