HARPmythsIf you’re not familiar with the Home Affordable Refinance Program, also known as HARP, it’s a government program that started in March 2009 that allows homeowners to refinance who may have run into some roadblocks due to the decreased value of their home. If your home is underwater, as in you owe more than your home is worth (aka negative equity), and you’re current on your mortgage payments, you could be eligible to refinance up to twice your home’s value. Now, because that sounds so great, many doubt HARP is legitimate or that it could work for them. While there are requirements you have to meet to qualify, many have misconceptions about HARP that are misguided or completely false. Here are two of the biggest misconceptions about this potentially money-saving program.

Myth: HARP Will Give Me High Closing Costs

Many people are reluctant to consider HARP because of assumed high closing costs, especially if they’re refinancing into a 30-year fixed-rate loan. This makes total sense to many people: If you’re underwater on your property in the first place, the last thing you want to do is add brand new, large closing costs to the financial deficit you already have on paper. However, HARP doesn’t require a borrower to go into a 30-year loan, and your closing costs can be rolled into your monthly payments instead of a lump sum. So on top of refinancing when underwater, you have the chance to change up your loan agreement if you need to, and avoid a lump payment. You can also net your escrow on top of this when switching to HARP, lowering the closing costs even more.

Myth: You Can’t Trust HARP Lenders

Many people got the impression that HARP had to be a scam considering how many lenders were stressing it at the beginning of the year; again it seemed too good to be true, especially if everyone is saying, “Dive in! The water’s great” all at once. This is because of the original deadline set up by the government: December 31, 2013. Many mortgage companies pushed HARP very hard at the beginning of the year knowing the deadline was approaching, but just a few months ago the deadline for HARP was extended to December 31, 2015. The good news is the program is available for another two years. Unfortunately, the validity of the program suffered when everyone began pushing it at the same time. Don’t let the media blitz cast doubts on this program, it’s helped others and it could help you too.

Fannie Mae has gone on the record regarding HARP, saying “Homeowners are saving over $250 a month on average.” Fannie Mae also noted that, “Average actual monthly payment savings based on total 2012 Fannie Mae HARP mortgage volume. Your monthly savings may vary based on the specific terms of the loan selected, the interest rate, APR and other factors. All loans subject to credit approval.”

So, as you can see, there are qualifications that need to be met because it’s government sponsored, but HARP is designed to help those who need it, so there’s no harm in contacting a reputable lender to see if you qualify.


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This Post Has 16 Comments

  1. We have a very high rate on our second mortgage (originated 2009) and we were able to refinance our first mortgage in 2012 at a bit lower rate. We are approx. 100% LTV, but we have never missed a pay ment on either loan. Would we qualify for a HARP loan?

    1. Hi Andrea:

      In terms of the timeline on HARP, It would depend on when in 2009 you closed on your original second mortgage. I should be upfront with you that we don’t do second mortgages, but we might be able to go over your options. If you want to combine them, that’s something we can help you with.

      Kevin Graham

  2. Hello, I’m not sure if you can help but I want know if I don’t ask and if you can;t maybe you know someone that can. My name is Armedia Simpson and in 2012 I lost my mother who owned a home in New Jersey but she passed in Charlotte NC . When I tried to take care of the house in NJ they told me that I had to have the death certificate changed. I tried to get NC to change it and they wouldn’t they said that she was a resident of NC and that they would not do it. It’s like they are saying that she couldn’t have two residents, that’s a joke. Anyway my grandson and his mother was living in the house and she was trying to do something and it didn’t go through. Now she has some lawyer trying to get me to sign some papers I told them to leave me alone and let the bank take the house, because I had asked my grandson’s mother to sell the house before my mother passed but she didn’t trying to squat in the house by just paying the basic and the taxes, and I think that is how she was able to live there from 2009 until now. It maybe to late to do anything but was there something that I could have done to keep the house. Would appreciate a response no matter what.
    Thank you
    Armedia Simpson

    1. Hi Armedia:

      This all sounds very complicated and I’m not sure what her residence has to do with it. If you had any rights to the house according to her estate, you might be able to do something about it, but I’m going to send this to someone who might be able to give you more thorough advice. Thanks for reaching out!

      Kevin Graham

  3. I have tried to get a loan modification because my second morgage is 11.9%
    Because I am not behind, no one will help me. How sad is that. It is better bot to pay your mortgage.

    1. Hi Mary:

      I’m sorry to hear that. That’s a difficult situation. If you don’t make the payments and get behind, your credit is going to take a hit. The same thing would happen if you did a loan modification. I don’t know if you might be able to refinance your second mortgage at a lower rate or take cash out of your primary mortgage to pay off the second loan and pay off the debt at a substantially lower rate on your primary. I’m going to have one of our Home Loan Experts reach out and see if we can look into your situation and offer any advice.

      Kevin Graham

  4. HARP is not a good thing. Yes I keep my home. I start at 2% and now after 7 years my payment goes to 4%. The payment will go to 6% over the next 2 years. Over 1500 a month. Then after my final payment, by the way, payments started in 2008 and end in 2036, I have to pay $72000.00 as a final payment…I know I’m going to have to sell out soon. Just can’t afford. It seems to me something is dishonest in the program or with SPS….

    1. Hi Jim:

      It doesn’t sound like you’re talking about HARP. It sounds like you’re dealing with a loan modification. I’m going to have someone reach out and look into your situation.

      Kevin Graham

  5. In 2011 I found myself drowning due to my husband’ death. That’when I applied for a Harp loan with my mortgage company,Ocwen. While I finally received the loan at a fantastic rate of 2.00 percent on a 15 year loan,I got hit with a balloon payment in 2022. Needless to say there is no possible way I can pay a $65,000 balloon payment. I was truly unaware of this payment. I didn’t know HARP allowed for this. So, come 2022 ,I will have no home and be on the streets. Can you give me any insight to my dilemma.

    1. Hello, Linda. I’m terribly sorry to hear about your situation. I’m going to have one of our amazing home loan experts reach out to you about this. They’ll shoot you an email to further discuss your situation. All the best!

  6. What about Wanda here? No answer for her. Just filled out one of your HARP come ons. Why don’t you give all the necessary information in them? Like that you have to have owned before 2009 and have to have no equity. Otherwise, the program is useless. Why do you advertise for something, acting like people like me could benefit, only to get my information and – what -sell it on the internet? So tired of misleading practices from all sides.

    1. Hello, TD,

      When commenters and clients give personal information, we message them separately, as a way of protecting their privacy. Yes, HARP has very specific qualifications, but nearly 3.3 million homeowners have refinanced their mortgages through the government program as of last November, saving them an average of $191 a month. According to the New York Times, 700,000 homeowners are still eligible.

      If you’d like to learn more about HARP, feel free to browse through our selection of Zing articles on the topic. And if you have any more questions about our practices or the products we offer, you can reach out to Emma, one of our home loan experts at Emma@quickenloans.com

  7. I missed ONE mortgage payment in my entire life: Dec, 2013.
    Ocwen, my current mortgage lender contacted me telling me about a loan modification program that they could help me with. My current interest rate is 7.99% and I was interested in reducing my interest rate. My financial stability is in serious question. My son die, my husband and I divorced and I was too broken to go back to my job at Verizon Wireless due to stress involved. All this within 8 months.
    I own an arts and crafts cafe which I purchased with a settlement from my ex husband. I thought this would provide me the income that I was missing from my job. Things have been slower than expected and my total income is from a rental agreement with my mother who leaves in an apartment in my subject property.
    I have another job, but in Dec 2013, I fell from a ladder and suffered from a concussion and again was unable to work for 3 months. When I went back to work, they cut my hours, so that my income there doesn;t even pay for the health insurance that I have from them.
    There have been many changes in my life, even since Dec, 2013 and Ocwen is dragging their feet to get this done and my situationh continues to worsen.
    Now my credit is destroyed because they told me not to pay my mortgage and now I am in foreclosure. I no longer trust or value their assistance.
    Do you think you can help. I always had excellent credit until now and I have a retirement plan that I could plunder to pay off the mortgage but I expect my business to pick up and it has so I really don’t want to go that route unless necessary.

  8. Traditionally, mortgage lenders and banks will only refinance your mortgage loan if you have at least 20 percent equity in your home. But if you owed more on their mortgage loans than what their residences were worth then you may wish to refinance your mortgage.

    1) Call several mortgage lenders to see if any would be willing to refinance your mortgage loan even though you owe more on it than what your home is worth. Ask lenders if they are participating in the federal government’s Home Affordable Refinance Program. This program provides financial incentives to lenders that agree to refinance the mortgage loans of homeowners who owe up to 25 percent more on their loans than what their homes are worth. Under the Home Affordable Refinance Program, homeowners who owe $125,000 on a home with a market value of $100,000 could qualify for a refinance. Lenders don’t have to participate in the program, though, to agree to refinance the loans of owners who are underwater.

    2) Give your lender permission to send an appraiser to your house to determine the current market value of your home. This is an important step. You already know that you owe more on your home than what it is worth. If you owe too much more, though, you might not qualify for a mortgage loan. Lenders participating in the Home Affordable Refinance Program require that you owe only 25 percent more than what your home is worth. Lenders across the country will have their own limits.

    3) Sign the closing papers that make your refinanced loan official, if you don’t owe too much more on your mortgage than what your residence is worth. You’ll also have to pay your refinancing fees at this time. You can pay them in one lump sum or roll them into your mortgage loan payments and pay them over time.

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