HARP Expires 12/31/2016
According to HARP.gov, there are still more than 300,000 homes that could qualify for the popular underwater refinance program called HARP 2.0.
FHFA, the organization that oversees HARP, examined homes with loans originated before June 2009 and have little or no equity and meet other requirements. The results were shocking.
Despite today’s low mortgage rates, more than a quarter-million people are still holding onto their mortgages at 5%, 6%, or even higher.
Perhaps they have been denied in the past and have never tried again. As banks loosen lending standards, many could now qualify.
And they have about one year left to do it.
HARP 2.0 was set to expire at the end of 2015. Then mid-way through the year, FHFA extended the program until December 31, 2016.
If you are a homeowners and think you might qualify, you should check your eligibility status now>> and beat the rush that’s sure to come in 2016.
This HARP Alternative Becoming Real Possibility
The Home Affordable Refinance Program, or HARP has helped millions of underwater homeowners.
But millions more are not eligible because their loan is not owned by Fannie Mae or Freddie Mac.
For those homeowners, there are other refinance options.
Most homeowners have heard of a cash-out refinance. It allows those with equity in their homes to receive cash at closing.
A cash-in refinance is the opposite. It is when a homeowner puts cash into the transaction to close the loan because they don’t have enough equity.
Here’s how this strategy can work. Say you could save $350 per month by refinancing, but you are $10,000 short on equity and not HARP eligible. You could take $10,000 from another source to close the refi.
The funds could come from a number of sources.
- A personal loan or line of credit
- A current investment or savings account
- Sale of an asset like a car
While it may sound like you’re robbing Peter to pay Paul, the numbers might just make sense.
In the above example, your savings are greater than making interest income from a $10,000 investment. Likewise, your monthly cost for a $10,000 loan is probably less than $350 per month.
A refinance lowers the interest on your entire loan balance, unlocking lower overall strain on your budget.
A cash-in refinance is definitely worth a back-of-the-napkin calculation to see if it would save you money each month.
If you can come up with the cash to make up your negative equity, a standard non-HARP refinance could work.
Click here to verify your eligibility for a non-HARP refinance.
Non-HARP Cash-In Refinance Types
If you make up your negative equity with cash, here are your refinance options:
- Refinance up to 97.75% of the home’s current value.
- Can refinance a loan that is not eligible for HARP.
- Military service required.
- Can refinance any loan type up to 100% of the home’s current value.
- Need 3-5% equity or cash-in to refinance.
- Requires mortgage insurance.
HARP 2.0 Extended until December 31, 2016.
The popular Home Affordable Refinance Program has been extended one year until the end of 2016. This will give underwater homeowners a little more time to qualify for the program.
FHFA, the government organization that oversees HARP, estimates over 600,000 homeowners could still benefit from HARP.
That begs the question: why haven’t these households pulled the trigger on a refinance yet?
Many can’t qualify. Their credit was ruined in the aftermath of the Great Recession. Fortunately, they have an extra year to get back on track and take advantage of today’s low rates.
Others have put off checking into their HARP eligibility. Rates have fallen to the point of potential monthly savings but perhaps life got busy. Misconceptions that the HARP process is difficult haven’t exactly motivated these homeowners.
Still others don’t know much about HARP. Contrary to popular belief, it’s not a program for those who have missed payments or need a loan modification. It’s actually set aside for those who have faithfully made their mortgage payments despite falling values.
Whatever the reason, the truth stands that many homeowners can still save money each month with HARP. With 30 year fixed rates in the 4’s, it’s a great time to take advantage of some of history’s best rates.
Rates Rise, but Remain Below Year-Ago Levels
Mortgage rates recently rose to 3.80% according to Freddie Mac’s weekly rate survey. This marks a significant rise from the 3.65% average from two weeks earlier.
Still, rates are well below where they were one year ago. Last May, the 30-year fixed rate averaged 4.20%. The 0.40% lower rates available today will save homeowners $33 per month for every $100,000 borrowed.
What’s more, HARP is still available through the end of 2015 (as far as we know now) so it’s a golden opportunity for homeowners to reduce their rate and payment even if they are underwater.
Will HARP be Renewed until 2016?
The popular HARP refinance program that allows underwater homeowners to drop their rate and payments is set to expire on December 31, 2015. But will it be extended?
HARP’s first expiration date was back in December 2013. But in April of that year, the program was extended until 2015. Now that we’ve reached April 2015, we should hear whether FHFA will extend the program once again.
There have already been rumors. In June 2014, U.S. Treasury Secretary Jacob Lew publicly announced a one-year extension of HARP to help with affordable housing efforts. The FHFA has not of yet confirmed the extension, but given Lew’s proclamation, something could be in the works.
A December 31, 2016 HARP extension would help families who are still repairing credit after the Great Recession starting in 2008. Many are still paying high rates on their HARP-eligible mortgages from years ago, yet have not had the credit score to qualify. A little extra time could change that.
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To see if you are eligible for HARP now, click here to get a free, no obligation rate quote.
HARP Mortgage Rates Near 2015 Lows.
With Less Than 1 Year Left for HARP, It’s Perfect Timing
HARP mortgage rates keep dropping.
According to Freddie Mac’s weekly nationwide survey, the average 30-year fixed rate was just 3.66%.
These are close to the lowest mortgage rates seen since February. After a brief uptick, rates are dropping again on global economic concerns as well as weak job market data in the U.S. This is a golden opportunity for homeowners who haven’t yet pulled the trigger on a refinance.
Many are still waiting for the perfect rate. Now it seems nearly perfect rates are here. The 30-year mortgage rate averaged 4.17% in 2014, an incredibly low rate itself. Yet, somehow rates dropped again.
Compared to last year, homeowners will save an additional $60 per month on a $250,000 mortgage. This amount is on top of the money they would have saved at last year’s rates.
Dropping Rates Come At Perfect Time
The HARP program expires December 31, 2015. Unless Fannie Mae and Freddie Mac extend the date, homeowners will need to use traditional methods to refinance.
When HARP expires, underwater homeowners may have no refinance loan options. Homeowners with some equity, but less than 20%, will receive higher rates and mortgage insurance.
That’s why homeowners should act as soon as possible. There is sure to be a rush toward year end. Lenders could be overwhelmed with last-minute HARP applicants.
HARP mortgage lenders are taking applications and locking in loans at record low rates. Even borrowers who have been denied in the past may now qualify due to lower rates and payments.
Conventional 97% LTV “Mini HARP 3.0” Program
Fannie Mae and Freddie Mac have rolled out a program that some are calling a mini HARP 3.0, or even HARP 2.5. It allows homeowners with just 3% equity in their homes to refinance into today’s rates. The program is available effective December 13, 2014.
The new program could prove useful to many homeowners who have been locked out of refinancing with HARP. Fannie Mae and Freddie Mac have their own versions of the program, each with their own advantages.
Here’s a breakdown of requirements:
Fannie Mae 97% LTV refinance guidelines:
- The homeowner must have at least 3% equity based on the property’s current appraised value.
- The home must be occupied by the borrower.
- The current loan must be owned by Fannie Mae.
- The loan does not have to have been opened before June 1, 2009.
Freddie Mac 97% (Home Possible Advantage) refinance guidelines:
- Maximum loan amount of 97% of the property’s current value.
- The current loan does not have to be owned by Freddie Mac or Fannie Mae.
- Borrowers must be at or below income maximums set for each county.
Guidelines for both programs:
- The new loan must be a fixed rate mortgage.
- 1-unit homes, condos, townhomes or PUDs only. No manufactured homes.
- No cash out allowed.
- Mortgage insurance is required. Reduced PMI available to certain borrowers with low to moderate income based on geographic location.
- The current mortgage must be in good standing
- At least fair to good credit rating is required.
It’s easy to see why many call this program the “Mini HARP 3.0”. It allows homeowners who purchased or refinanced after May 31, 2009, and those who don’t have a Fannie Mae loan to refinance. Alt-A, subprime, and option ARM mortgages are now eligible for a refinance into more stable fixed rate loans.
To check rates and eligibility for this program, complete a short online form here and a lending professional will contact you right away.
2015 HARP Changes?
There have been rumors over the past year and a half of a new HARP version, who many in the mortgage industry have dubbed HARP “3.0.” HARP 3.0 would get rid of the ownership requirement and allow anyone with a mortgage who could qualify under all the other guidelines refinance even if they were severely upside down on their mortgage.
Fannie and Freddie own the vast majority of all loans originated in the current environment but one of the reasons for the financial crisis and the onslaught of the recession was the abundance of “alternative” loans and subprime mortgages issued to those with poor credit. An alternative mortgage typically meant all or part of the loan application wasn’t verified including money in the bank, income or employment. Overall loan qualify deteriorated to the point that finally loans across the country were foreclosed upon. There are millions of such loans today that could take advantage of lower rates but can’t because the loans weren’t approved using Fannie or Freddie guidelines. Will 2015 be the year HARP 3.0 is finally introduced?
While many hope that’s the case, the decision makers have kept their poker faces on when it comes to HARP enhancements. Why the silent treatment? We can only guess, but it could be that they are waiting for property values to rise. This would allow non-eligible homeowners the chance to refinance without a special program.
Silence from FHFA Director Mel Watt
It was thought the new Federal Housing Finance Agency (FHFA) director Mel Watt, generally thought of as a consumer’s rights advocate, would get the ball rolling to allow certain changes to HARP 2.0 to allow borrowers with non-Fannie/Freddie loans to take advantage of the program. Yet so far, nothing has come from the agency nor the director regarding any substantive changes in the forthcoming year.
Congress still has pending legislation that would change HARP 2.0 to allow more homeowner to refinance out of their higher rate loan to a lower rate, yet the bill has yet to see the light of day and stuck in committee. In fact, it’s been in its current status for about a year and a half now.
Another important change that could arrive in 2015 is allowing the multiple use of HARP 2.0. Currently, a borrower can only use HARP once. But for those who took advantage of the program when rates were in the 5.00 percent range, they couldn’t refinance when rates fell to 4.00 percent and below. Mortgage rates hit their record lows in January of 2013 and the 30 year rate has hovered between 4.00 and 4.25 percent since early May of 2014.
Refinancing activity has fallen significantly as those who were able to refinance have already done so. Yet there are still homeowners who can’t refinance because there have been no real changes to HARP 2.0 since its introduction. And so far in 2014, it doesn’t appear that next year will be any different. Mortgage lenders are hoping otherwise, but there doesn’t seem to be any real interest in Congress, the Administration or FHFA.
Previous HARP Updates:
Lenders Loosening HARP Rules
Each month the Mortgage Banker’s Association publishes its Mortgage Credit Availability Index, or MCAI. A recent report showed mortgage credit is more available than it has been in years past.
Each uptick in the index indicates that lenders are loosening up on refinance restrictions. Fannie Mae and Freddie Mac set HARP rules, but many lenders choose to enforce additional guidelines that keep homeowners from an approval. Now, many lenders are lowering credit score minimums, allowing higher loan amounts, and generally becoming more lenient toward borrowers.
Even homeowners who have been denied for HARP before may now receive an approval.
Recent HARP Refinance Rates make Home Payments even More Affordable
HARP rates – and mortgage rates in general – are at historically low levels.
Recent lower rates mean homeowners can save even more on their monthly payments than they were able to just a few months ago. At these lower rates, more homeowners are discovering that it makes sense to refinance.
Whenever homeowners refinance, they consider how much they will reduce their current payment. If it’s not enough, they won’t go through with the refinance. Just a slightly lower rate could mean the difference between refinancing and waiting. As rates drop, thousands more homeowners discover that the refinance “pencils out” – it’s now worth it.
HARP Eligibility: More qualify for the Home Affordable Refinance Program
Lower HARP rates cause the refinance to “make sense” to the homeowner, but they also mean more homeowners now qualify for the program.
A lower house payment helps lenders approve the HARP loan more easily. The borrower’s total monthly payments are lower compared to his or her income.
In addition, HARP eligibility depends on what’s called a Net Tangible Benefit (NTB). In other words, HARP rules state the borrower must benefit from the refinance. If the borrower doesn’t benefit, the lender won’t approve the HARP loan.
Some Net Tangible Benefit examples are:
- The homeowner is lowering his or her interest rate and payment
- The borrower is converting a 30-year fixed into a 15-year fixed.
- The homeowner is switching from an adjustable rate mortgage to a fixed rate.
As rates drop, more homeowners meet the NTB rule and are able to use the HARP refinance to improve their financial situation.
Check Today’s HARP Mortgage Rates
For many homeowners, the window to refinance despite little home equity is slowly closing. Mortgage experts unilaterally predict rising mortgage rates in the near future, and the HARP program will be a thing of the past after December 31, 2015.
One of the benefits that rose from the ashes of the housing debacle of the last decade was lower mortgage rates. The period from December 2007 through June 2009, sometimes referred to as the Great Recession, was the result of a financial assault on several fronts. Home ownership rates hit record levels when nearly 7 out of 10 owned a home.
Economic downturns typically lead to lower rates. The housing meltdown was no exception. The Fed ratcheted down rates as much as possible. Low rates led to a wave of refinancing any those that could, in fact did. But millions of homeowners were “underwater” — they didn’t have the equity required to refinance to a lower rate.
That’s where the Home Affordable Refinance Program, or HARP, came in. It removed the rule that said homeowners had to have equity to refinance. To date, over 3 million homeowners have refinanced who would not have been able to.
Fortunately, rates are still low and the estimated 9 million homeowners who could benefit from HARP still have a chance to refinance. The program runs through December 31, 2015. Will rates still be low by then? No one knows. But homeowners who qualify are snatching up today’s low rates while they’re available.
The HARP Timeline
Recognizing this housing dilemma, the Federal Housing Finance Agency, or FHFA created the Home Affordable Refinance Program, or HARP in March of 2009. This new program allowed home owners who owned more than their home was worth to refinance their loans under certain conditions.
Historically, conventional loans need equity in order to qualify for a refinance and most conventional lenders required at least a 10 percent equity position. Yet a 10 percent equity required mortgage insurance or a second mortgage which could wipe out any benefit. It takes at least 20 percent in equity to avoid mortgage insurance.
The original HARP program allowed for a refinance if the loan-to-value reached 105 percent. That meant a borrower could refinance a $105,000 mortgage if the value of the home was just $100,000. While there were good intentions with the program, it was a dud. Soon thereafter FHFA increased the 105 LTV requirement to 125 percent. Still, there were kinks in the program that kept lenders at bay and finally HARP 2.0 was introduced in 2011 to address the issues making lenders reluctant to use the program.
HARP 2.0 eliminated any LTV requirement whatsoever removing the requirement for an appraisal. Regardless of how upside down the borrower was, someone with a conventional loan owned by Fannie Mae or Freddie Mac could be eligible for the program, reducing the rate and lowering the borrower’s monthly payment. The mortgage must also be originated prior to June 1, 2009. HARP 2.0 was a success by closing one million loans in the first 12 months, a feat that took the initial HARP three years to reach.
But there are those without a conventional or government-backed loan that still cannot refinance due to their underwater status, those with so-called “alternative” loans that are not owned by Fannie or Freddie and were never used to approve loans with those guidelines.
That’s why HARP 3.0 has been waiting in the wings but it’s been waiting for some time that no one is sure that this program, which will help millions of home owners, will ever fly.
Did Watt Flip Flop on HARP 3.0?
There have been congressional bills waiting to get out of committee that would implement a HARP 3.0 program but they’ve been there for nearly two years now. There was some excitement earlier this year when former House Representative Mel Watt was appointed and confirmed as the new head of FHFA. Seen as a consumer advocate it was thought by many that HARP 3.0 was just around the corner. It all made so much sense due to the success of the HARP 2.0 program and the sheer number of homeowners who could take advantage of the program. Yet they may still be waiting if recent comments from Director Watt are any indication.
At his first public speech last month, Watt spoke at length about the status of Fannie Mae and Freddie Mac. There are various attempts in both the House and Senate to alter or even privatize both entities. Doing either is a major change. And for borrowers and lenders alike who were waiting for the arrival of HARP 3.0, Director Watt dampened their enthusiasm.
During the speech, Watt clearly stated that FHFA would concentrate on reaching out to the nearly 1 million homeowners who could benefit from the current HARP 2.0 program and not alter HARP to accommodate those whose loans are not currently owned by Fannie or Freddie. It couldn’t be more clear.
Did Watt flip-flop? No. While many anticipated his blessing he never came out and said he was in favor of HARP 3.0, it was merely an assumption by those in the industry.
Unless a new effort is made through Congress to get a bill to the floor, HARP 3.0 won’t see the light of day. That doesn’t necessarily mean it never will, but Congress needs to get their process in order and get a bill to the floor and ultimately with the President’s signature.
If you’re not sure if you qualify for HARP, complete this simple form and a professional HARP lender will check your eligibility.