The Federal Housing Finance Agency (FHFA) and the Department of Treasury introduced the Home Affordable Refinance Program (HARP) in 2009 as part of the Making Home Affordable Program. For nearly a decade, HARP helped existing homeowners who were behind on their mortgage payments to get a more stable and affordable mortgage. The government refinancing program ended on December 31, 2018.
Real estate values plummeted during the 2008 financial crisis, leaving many homeowners with little or no equity. These borrowers were stuck owing more on their mortgage than their home was worth. The HARP mortgage program gave underwater homeowners the chance to refinance to lower rates, keep more of their money every month, and build equity once again.
Alternatives worth considering
Two HARP replacement programs went into effect on November 1, 2018. They were the Freddie Mac Enhanced Relief Refinance (FMERR) and the Fannie Mae High LTV Refinance option. While Freddie Mac’s program has since expired, Fannie Mae’s loan remains an option for homeowners.
Benefits of a high LTV refinance
Here are some of the benefits of a high LTV refinance through Fannie Mae:
No mortgage insurance
- If you don’t currently have it, you won’t need it for your new loan. Borrowers who have mortgage insurance (MI) must have it transferred to their new loan.
Easy qualifying requirements
- There’s no minimum credit score or maximum debt-to-income ratio with this program. You may not have to verify your income, assets, or liability information either.
Quick to process
- In many cases, a lender can process a high LTV refinance faster than a standard refinance.
How the new program differs from HARP
Homeowners could only use HARP once. That’s not the case with Fannie Mae’s high LTV refinance, though, as borrowers can use the program as often as they need it. Just know that you won’t be able to qualify for the replacement program if you already refinanced with a HARP mortgage.
Something else to consider is that Fannie Mae requires an underwater loan to be at least 15 months old before it can be refinanced. Those familiar with HARP may remember there was no loan requirement.
The third major difference has to do with the LTV ratio, which you can calculate by dividing your remaining loan balance by your home’s appraised value. If you owe more than 97% of your home’s current value, you may be eligible for this new program. This is much higher than the 80% minimum LTV required by HARP.
How a lender can help
Are you upside down on your mortgage but aren’t sure if a high LTV refinance makes sense? Our dedicated mortgage consultants can help you review options that may get you back on track with your home loan. Give us a call today, (800) 910-4055.