Description of Home Affordable Refinance Program
The Home Affordable Refinance Program (HARP) is a temporary refinance program established in 2009 as part of the government’s Financial Stability plan under the Making Home Affordable initiative. The program has been extended twice, but is scheduled to expire June 30, 2012, with no expectations for further extensions.
Home Affordable Refinancing allows Massachusetts homeowners (including owners of second homes and investment properties) who are current on their Fannie Mae or Freddie Mac mortgage to refinance even if their property has fallen in value. More specifically, a Home Affordable Refinance allows homeowners to lower their rate or convert their adjustable rate mortgage into a fixed rate loan with a loan-to-value (LTV) ratio greater than 80% (up to 125% of the current value of their property) with no mortgage insurance if their present mortgage does not have MI.
Even Massachusetts homeowners who currently pay mortgage insurance can benefit from a Home Affordable Refinance with special rules that are intended to keep their mortgage insurance at approximately the same monthly payment even with a higher LTV due to declining property values.
Massachusetts home loans available under the Home Affordable Mortgage Program include fixed rate mortgages (10, 15, 20, 30 and 40-year fixed rate) and adjustable rate mortgages (5/1, 7/1 and 10/1 ARMs).
Making Home Affordable Guidelines
- Existing loan must be owned by Fannie Mae or Freddie Mac *
- Loan-to-value ratio cannot exceed 125% of property’s current value
- Limited to “rate & term” refinances of first mortgages only (cannot pay off a 1st and 2nd mortgage under this program)
- No maximum combined loan-to-value (CLTV) ratio limit for existing subordinate financing **
- No new subordinate financing
- Maximum loan amounts up to $523,750 in Massachusetts for 1-unit properties depending on county (higher limits for multi-unit properties)
- Maximum of $250 back to the borrower at closing (closing costs and prepaids/escrows may be rolled into loan amount subject to limits)
- Borrower required to benefit from refinance in the form of a reduction in the mortgage payment or movement to a more stable product (e.g. refinancing an adjustable-rate mortgage to a 30-year fixed rate mortgage, not vice versa)
- No mortgage insurance required on new loan if none in place on current mortgage
- Existing loan must have been delivered to Fannie Mae or Freddie Mac before May 1, 2009
- No late payments on current mortgage in the past 12 months or life of the loan (in extremely limited circumstances, the program allows for up to one 30-day late payment)
* Check if your mortgage qualifies using the Fannie Mae Lookup Tool or Freddie Mac Lookup Tool.
** Even though HARP does not have limits on the maximum CLTV, the existing lender of the 2nd mortgage must agree to subordinate to the new 1st mortgage. Beware that 2nd mortgage lenders often will not subordinate without the homeowner having some equity in the property.
