Home Affordable Refinance Program

HARP is short for Home Affordable Refinance Program. When this special refinance program for underwater homeowners first came out it was not very practical due to higher interest rates. However with interest rates at record lows this program has finally come to life to assist borrowers with refinancing Fannie Mae or Freddie Mac home loans.

While these underwater refinance programs are similar they do have some differences that homeowners need to be aware of. The Fannie Mae Du Refi Plus Program allows borrowers to choose any mortgage broker or lender that originates Fannie Mae Loans. With the Freddie Relief Refinance Mortgage the borrower must refinance with the lender who services the loan or a mortgage broker who can originate for that lender.

The first step for a homeowner will be to use the look up tools to find out if either agency owns their loan. If Fannie Mae owns the loan, borrowers are free to choose any Fannie Mae lender or mortgage broker. If it's a Freddie Mac Loan borrowers must contact the servicer who they send payments to or a broker approved with that lender-servicer.

Links to both agencies online loan look up tool:

www.fanniemae.com/loanlookup
www.freddiemac.com/mymortgage

If neither agency owns the loan then homeowners must find an alternative program like the FHA Short Refinance Program.

Many homeowners and investment property owners are still unaware of the possibilities to reduce mortgage payments with this program. Second homes and investment properties are eligible to refinance. Debt to income ratios are much more flexible than a regular refinance. In some cases income is not verified. The best thing to do is to apply for this program and ask your lender or broker to do automated underwriting for pre-approval without ordering an appraisal. You don't want to pay an appraisal fee if you will not qualify.

There are some differences depending on which agency owns your loan. On Fannie Mae loans the max total loan to value for both first and second loans is 110%. The Freddie mac program allows an unlimited total loan to value (CLTV). Both programs allow up to a 105% loan to value ratio on the first mortgage balance compared to the appraised value. Fannie Mae allows late payments of up to 59 days on the existing mortgage being refinanced. Fannie Mae has a minimum credit score of 620 while Freddie has no minimum loan score.

The best thing to do is to find out if your home loan is backed by either agency and then contact a professional who is familiar with the making home affordable guidelines to see if you will qualify.