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On October 25, 2011, President Obama by executive order implemented changes to the Home Affordable Refinance Program (HARP.). These changes were made to increase the amount of people that the HARP program can help to refinance their homes to lower mortgage rates.
But in December 2018, the Federal Housing Finance Agency (FHFA) ended it. HARP was established in 2009 to help homeowners who are up-to-date on their existing mortgage loan but may have little or no equity, to benefit from low mortgage rates. Freddie Mac’s HARP replacement program (FMERR) also expired as of September 2019.
Having said that, homeowners with low equity or who are underwater on their mortgages may still be eligible to refinance their home loan using Fannie Mae’s HARP replacement program.
While HARP and FMERR are no longer in effect, Fannie Mae’s High-LTV Refinance Option (HLRO) is still in force as a replacement. Any homeowner who missed their chance to refinance at a lower interest rate using the previous two programs may still be qualified to refinance under Fannie Mae’s new replacement program.
In order to be eligible for HLRO, the mortgage being refinanced must already be a Fannie Mae mortgage. Eligible homeowners may also be able to refinance with this high-LTV program more than once. But a HARP mortgage cannot be refinanced to an HLRO mortgage. Further, this HARP replacement program only allows the refinancing of mortgages that originated on or after October 1, 2017.
Any mortgage insurance will have to be transferred to the new mortgage. However, if you don’t already have mortgage insurance, none will be required for the new loan.
According to Fannie Mae guidelines, borrowers must owe over 97% of their home’s current value. The home must also be their primary residence. This is for single-family properties.
For multi-unit complexes, second homes, or investment properties, the minimum loan-to-value requirements are lower:
If your loan-to-value ratio – which is the loan amount relative to the value of your home – is lower than Fannie Mae’s HLRO refinancing minimums, then you should be eligible to refinance the conventional way.
The administration believes that if consumers can take advantage of the current low mortgage rates the economy will rebound. Homeowners that feel secure about their homes are more willing to spend money outside of their homes. This increase in spending will then transform into job creation as product is needed to fill the consumers demand. Consumer confidence is one of the leading factors in a good economy.
The HARP program was first initiated in June 2009. At that time it was anticipated to help 4-5 million households refinance into lower interest rate mortgages. However, the program was very hard to qualify for.
Even though the HARP program has ended, its replacement – HLRO – is expected to help and is easier to qualify for. Documentation for this program has been simplified, with no minimum credit score required. Further, you may be eligible to have an appraisal waived, which means you will not have to pay for an appraisal with your refinance, saving you anywhere between $300 to $400.
If you have any questions about mortgages in Washington State or any other part of the Pacific Northwest, Sammamish Mortgage can help. We are a family-owned and operated mortgage company serving the Pacific Northwest for 28 years. We currently lend in all of Washington, Oregon, Idaho, and Colorado and offer many mortgage programs and flexible qualification criteria. Get in touch with Sammamish Mortgage today!
Are you refinancing your mortgage some time soon? If so, you may want to consider refinancing in WA with a VA loan. Read on to find out more and to check out our loan limits tool.
Home buyers are often drawn to the FHA mortgage program due to the low interest rates, low closing costs and generally attractive loan terms. However, there will come a time when many who have an FHA mortgage will want to refinance.