Editor’s Note: The HARP program expired Dec. 31, 2018, but most homes have increased in value considerably since HARP rolled out. This means many homeowners may currently be eligible for a standard conventional refinance.
The HARP program has been available for over seven years and has helped more than 3 million underwater homeowners refinance.
This mortgage type has been a key part of the housing recovery. It has enabled families to drop their monthly mortgage payments when traditional refinance methods don’t work.
HARP rates near 4% have helped some refinancing households save even more.
But HARP’s days are quickly ticking away.
The current expiration date for HARP 2.0 is set for December 31, 2018. There is just a little more than one year remaining for homeowners to qualify.
HARP Loan Still Popular with Homeowners
In the second quarter of 2016 alone, over 18,000 homeowners used HARP to drop their mortgage rate.
Twenty-two percent of HARP refinance applicants owed at least 105% of their home’s value. This loan-to-value level would keep them from refinancing if they didn’t have access to the program.
In states hardest hit by the housing downturn, HARP remains a prominent portion of all refinances. In Florida and Georgia, HARP refinances represented 9% of all refinances, according to the Federal Housing Finance Agency (FHFA) which oversees the HARP program.
Low mortgage rates are also propping up HARP refinance activity.
The average 30-year mortgage rate is expected to climb in 2018.
Many homeowners who calculate the numbers discover that a refinance is now cost-effective even if it was not just a few months ago.
HARP Misconceptions Delay Homeowner Action
While over 3 million homeowners have reduced their housing costs with HARP, it is estimated by FHFA that more than 140,000 homeowners who could benefit from the program.
There’s no clear answer as to why these homeowners have not yet refinanced but experts have made some sound guesses.
Homeowners have damaged credit. Millions of homeowners lost income in the economic downturn, leading to unpaid bills and damaged credit. Many still don’t qualify for HARP but are rebuilding their credit.
Homeowners misunderstand HARP. Some simply haven’t learned much about the program yet. They believe they won’t qualify even though they meet the requirements.
Homeowners believe the savings aren’t enough. Those with rates in the 4.75% to 6% range could save hundreds of dollars per month since HARP rates are still near 4%. Still, many believe they won’t save very much.
Homeowners fear the process will be difficult. The HARP application and approval process is streamlined and efficient. The truth is most homeowners are surprised that closing a HARP loan is short and painless.
It is difficult to determine exactly how many of the 9 million homeowners are eligible to take advantage of HARP. What is clear is that there are millions more homeowners who could reduce their monthly housing costs.
The only question that remains is, can they all get through the process as 2018 comes to a close?
Will HARP 2.0 Receive an Extension?
The original HARP loan was set to expire on December 31, 2013. That was extended by two years in April of 2013. Then in 2015, the program was extended an additional year, then again to September 30, 2017.
Now, the program has been extended again to the end of 2018.
Will we see another extension?
Probably not. Fannie Mae is rolling out a new program available January 1, 2019. The agency’s website states the requirements as follows.
- Minimum LTV of 95%, and does not qualify for other Fannie Mae refinance programs
- Loans opened after October 1, 2017 are eligible
- At least 15 months have passed since opening of the loan
In other words, if you get a loan after September 2017, you are eligible for a high-LTV Fannie Mae refinance starting in January 2019.
Alternate programs could also step in to replace the hole left by HARP. The new conventional 97 refinance allows homeowners to drop their rate with only 3% equity in the home. Refinance applicants could apply for a standard conventional refinance with only 5% equity. With this option, their current loan does not need to be Fannie Mae- or Freddie Mac-owned.
But no program currently on the market beats the cost and qualifying ease of HARP. To beat the rush for HARP that will happen at the end of 2018, anyone with even a small chance of qualifying for HARP should apply immediately.
Even if another program becomes available, rates could rise in 2017, taking the value out of a refinance.
Golden Moment for HARP
HARP rates are low and lenders are eager to gain business from HARP applicants. There have been few times that have better to receive a HARP loan than now.
Apply for a HARP refinance here and lock in recent low rates.