Many remember feeling the pressure during the decline of the economic scene in 2008. This financial crisis left homeowners with underwater mortgages and few—if any—options for refinancing. To try and help homeowners out of this challenging situation, the Home Affordable Refinance Program (HARP) was born.
Though HARP officially ended a few years ago, there is still help for homeowners today. Let's learn how this program assisted homeowners then and discover the options if you're currently struggling to repay your mortgage loan.
What Was HARP and Who Qualified for Assistance?
The federal government designed the Home Affordable Refinance Program to allow homeowners the option to refinance their mortgages, even if their home was worth less than the outstanding balance on their loan. To qualify for HARP, homeowners needed to meet specific criteria, including:
Mortgage owned by either Fannie Mae or Freddie Mac
Up-to-date on mortgage payments
A loan-to-value ratio greater than 80%
Loan origination date of May 31, 2009 or earlier
Despite the program's end in 2018, different refinancing opportunities exist for those in the same situation. For example, the Fannie Mae and Freddie Mac programs both offer refinancing options with eligibility requirements similar to HARP. Additionally, homeowners who have improved their credit scores or increased the equity in their homes may be eligible for traditional refinancing options.
The Difference Between Fannie Mae Vs. Freddie Mac
Fannie Mae and Freddie Mac are current government-sponsored programs created to provide stability and liquidity in the housing market. These programs have official titles—Fannie Mae is the Federal National Mortgage Association (FNMA), and Freddie Mac is the Federal Home Loan Mortgage Corporation—though industry experts commonly accept their nicknames, too. Both entities purchase and guarantee mortgages originated by lenders, which allows those lenders to free up capital to provide more loans.
While Fannie Mae and Freddie Mac have similar functions, the entities differ in a few ways. One of the main differences is the types of loans they purchase and guarantee. Fannie Mae focuses primarily on loans for single-family homes and has higher loan limits from larger commercial banks than Freddie Mac. On the other hand, Freddie Mac specializes in expanding the secondary mortgage market and guaranteeing loans for multifamily properties.
How Can You Refinance Today?
While HARP was a temporary program that ended in 2018, homeowners struggling today may still be able to refinance their mortgage through other options. If you are underwater—meaning that your home or property is not worth as much as you owe on the mortgage—there is still hope.
Eligible homeowners can still take advantage of the programs that replaced HARP. Various government programs exist for USDA, FHA, VA, and conventional loans. So, no matter what loan program you originally signed up for, there's a solution that'll fit.
There are available resources, such as the High Loan-to-Value Refinance Option (HIRO) run by Fannie Mae, which is especially helpful in areas where property values are declining. An FHA Streamline Refinance can also be a good option for homes with little to no equity—especially if you want to avoid getting a home appraisal. Additionally, the USDA Streamlined Assist Refinance option typically requires no down payment and lower credit score requirements.
Find The Right Refinancing Option for You
To find and apply for a HARP loan refinancing alternative, you must find a lender that can provide the right options—we're that team!
The Mortgage Minds Group can help you find the best refinancing solutions to meet your financial circumstances. Our team of professionals will provide customized options you can trust.
Simply click here to get in touch with us to start the process!
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