Refinancing your home can offer you a way to pay less interest on your homeowner loan and reduce your monthly payments.
Unfortunately, the situation many homeowners find themselves in is that they are not eligible for traditional refinancing because they either have no equity or are “underwater”.
This is a frustrating position as it feels like there is no way of ever improving your situation.
HARP offered a solution to homeowners in this position.
When it ceased to exist, people were again left feeling like they had very few options available to them.
Thankfully, the new Fannie Mae and Freddie Mac refinance programs can help borrowers with high LTVs to refinance their property at a lower interest rate.
The Home Affordable Refinance Program was brought to an end on December 31, 2018.
When it started in 2009, its purpose was to help homeowners with a good history on their existing mortgage, but who had little to no equity, get lower mortgage rates.
This was made necessary as a result of the U.S. housing market crash.
Homeowners were struggling to keep up with mortgage payments but couldn’t sell as they were finding themselves in negative equity.
The FMERR home loan program and the Fannie Mae High LTV program replace the Home Affordable Refinance Program that operated from 2009-2018.
The FMERR is the Freddie Mac Enhanced Relief Refinance program.
HIRO is the other main HARP replacement program, and it stands for the Fannie Mae High Loan-to-Value Refinance option.
Fannie Mae and Freddie Mac are Enterprises created by Congress in order to bring both stability and affordability to the mortgage market.
They buy mortgages from lenders and either hold them or sell them as mortgage-backed securities. This frees up money for the lenders to engage in further lending.
They both provide refinancing options to those who already have mortgages with either Fannie Mae or Freddie Mac and owe more than 97% of their home’s value.
Traditional refinance options require you to have at least 3% equity before they will even consider you.
Using one of the two programs, you may be able to refinance your mortgage even if you owe more than it is currently worth (i.e. you’re in negative equity).
These refinance options are available to homeowners who wouldn’t ordinarily qualify for standard refinance programs because of how much they owe against the value of their home.
Using either the Freddie Mac or Fannie Mae HARP replacement refinancing options can help you to decrease the term of your existing loan.
It may also reduce your overall monthly payments as well as lowering the amount of interest you pay both monthly and throughout the term of the loan.
This is therefore going to save you money every month that can be used in other ways, such as paying off other debt or providing you with some disposable income.
It can be incredibly demoralizing to feel like you’re stuck paying a mortgage without ever making any progress in paying off the loan.
Looking into the new Fannie Mae and Freddie Mac refinance programs gives you options again.
To be eligible to apply for refinancing under the program, you must:
There are a number of advantages that come with applying for a high-LTV loan over a traditional refinance. These are that:
Do you think you could benefit from the new Fannie Mae or Freddie Mac refinance programs?
If you’ve been turned away by traditional lenders, or don’t think you would be eligible, you can ask Fannie Mae or Freddie Mae.
They will tell you if you qualify for one of the HARP replacement programs.
You can also contact your current lender to see if they have any options for you to explore in mortgage relief.