HARP — or the Home Affordable Refinance Program — has helped more than 3.4 million homeowners refinance their mortgages since 2009, according to the Federal Housing Finance Agency. Created at a time when many homeowners were suffering due to the housing crisis and economic downturn, the government now touts it as one of the “most successful crisis-era programs” — and said just last August that more than 143,000 homeowners could still benefit.
The good news: HARP loans are simpler and quicker to obtain than many other loan types. Since the program is designed for people who have little to no equity in their home, it could help reduce loan terms.
The bad news: HARP is scheduled to end on December 31, 2018. And if you’re asking yourself, “what are my options after HARP expires?” here’s the good news: You’ll likely have a few choices.
First of all, eligible homeowners can still take advantage of HARP through that December deadline — and experts recommend doing that sooner rather than later simply because of how favorable interest rates are right now.
But, let’s say you realized that you might be eligible for the government-backed refinance option a little too late. There are two similar programs — one offered by Freddie Mac, and the other by Freddie Mae — that target borrowers who are current on their mortgages but still owe a lot compared to the available equity in their home.
The FHFA, which oversees both Freddie Mae and Freddie Mac, refers to these programs as High LTV Streamlined Refinance Programs. (LTV, remember, means “loan-to-value,” and it’s expressed as a ratio.) Fannie Mae’s HARP replacement is called the High Loan-to-Value Refinance Option, while Freddie Mac’s is called Enhanced Relief Refinance. These “streamline” programs don’t have an expiration date. Fannie Mae’s program is available for “refinance applications received on or after Nov. 1, 2018,” according to its website. Freddie Mac, meanwhile, says that “Enhanced Relief Refinance is scheduled to be available for mortgages with applications received in late 2018.”
Both programs are similar to HARP in that they require borrowers to have an existing Fannie Mae or Freddie Mac mortgage originated on or after October 1, 2017, and require that borrowers are current with their payments.
One key difference from the HARP program, according to HSH, the nation’s largest publisher of mortgage and consumer loan information, is that borrowers can reuse the new refinance programs. HARP is one-time use. (However, according to HSH, borrowers cannot refinance a HARP loan with either of these new programs.)
To learn more about loan options and discuss your unique financial situation with a professional, get in touch with Mr. Cooper.