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HARP, a program designed to help borrowers after the financial crisis in 2009, expired in 2018. If you have little to no equity in your home, but want the benefits of a refinance, there are other government programs out there for FHA, conventional, USDA and VA loans.
A refinance can help lower your interest rate, shorten your loan term, lower your monthly payment or switch from an adjustable-rate mortgage to a fixed rate — even if you have little to no equity.
Home Affordable Refinance Program (HARP) was a federal mortgage refinancing program set up by the Federal Housing Finance Agency in 2009 to help homebuyers struggling to pay their mortgage.
The program helped homeowners who consistently paid their mortgage, but had little or no equity take advantage of low interest rates with a refinance. The program helped millions of homeowners and expired on December 31, 2018.
Fannie Mae’s HARP replacement is the High Loan-to-Value Refinance Option (HIRO). This program helps homeowners with little or no equity to refinance their mortgage for a lower interest rate. This may be a good option for someone with a conventional loan looking to refinance and has a high loan-to-value ratio of at least 97.01%.
Here are a few basic HIRO loan eligibility requirements:
A few key features of a HIRO loan are:
Those with an FHA loan could consider an FHA Streamline Refinance. This program could be an attractive option for homeowners with little to no equity because homes that are underwater (you owe more than what your home is worth) are still eligible.
The requirements of a streamline refinance include:
A streamline refinance features:
If you have a VA loan, the IRRRL may be a good refinance option, especially if you have little to no equity in your home.
The Streamlined Assist Refinance is designed for USDA home loan borrowers with little to no equity in their homes.
Follow these steps to apply for one of these loan programs:
There are a couple of differences between the HARP loan program and these new refinance options.
Homeowners who applied for HARP could only use the program once. These alternatives don’t generally limit how many times you can use them, though there may be a waiting period or eligibility criteria.
Also, the HARP program didn’t have a waiting period between the date you closed on your mortgage and when you applied for a refinance. But waiting periods help lenders see a positive payment history, so loans like the FHA Streamline Refinance require homeowners to wait 210 days from your last closing before applying.
You can refinance your mortgage even if you’re underwater on it or have little or no equity in your home. Each loan program has specific eligibility criteria to make sure that a refinance can really help. Use a mortgage refinance calculator to estimate how much you can save and shop around to see what refinance programs you may qualify for.
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