What is a HARP refinance loan?


Quick Answer

A HARP refinance loan can help a homeowner refinance his mortgage if he owes as much or more on his home than it's currently worth, notes HARP. To qualify, a homeowner has to be current on his mortgage and have one that is owned by Freddie Mac or Fannie Mae.

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Full Answer

A HARP refinance loan helps a homeowner lower his monthly payment, decrease closing costs, lower his interest rate and build equity in his home faster, says HARP. A HARP refinance loan can also help the homeowner secure a fixed-rate loan with payments that don't change over time. Applicants aren't required to have a minimum credit score in order to qualify for a HARP refinance loan.

As of early 2015, some of the changes to the HARP refinance loan program include the elimination of underwater limits, appraisals and underwriting in addition to less income verification paperwork to complete, notes HARP. Some risk-based fees have been lowered for applicants who desire to refinance a mortgage with shorter terms. If an individual was denied a HARP loan in the past, the new changes might make it possible for him to qualify.

A homeowner with a bigger loan who initially received his mortgage when rates were low might benefit more from a HARP refinance loan when compared to a homeowner who has a mortgage that's less expensive, says Bankrate. An individual should compare the final closing costs of the loan with his actual savings before applying for a HARP loan.

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