Obama HARP Program

In 2009, the FHFA enacted the Obama HARP Program, known as the Home Affordable Refinance Program or HARP.  HARP is designed to provide mortgage relief to more borrowers and help support the still-fragile housing market.  The reach of the program will be extended beginning in March, 2012 by further relaxing LTV limits set by the original program.

The HARP Program primarily provides underwater borrowers (those whose home value is near or below their loan amount) the ability to refinance and take advantage of the near-record low rates currently. HARP is not loan modification, but it saves a homeowner money via reduced interest rates. And, can take place through a traditional mortgage broker or lender. While refinancing under Obama’s HARP plan doesn’t change the size of the loan, the benefits are  similar given how most people pay their loan down over 30 years:

  • The payment on your $335,000 (30 year) loan at 4.25% is $1,648/month
  • The payment on your $275,000 (30 year) loan at 6.00% is $1,648/month

Basically, a homeowner refinancing to a lower rate helps her with the monthly payment as if they reduced their principal balance $60,000.  The sum of payments over 30 years is going to be nearly because of the lower rate.

As of the November 2011 count, the Obama programs had helped approximately 9 million homeowners, with approximately 10% of the those utilizing the HARP refinance program through Fannie Mae and freddie Mac to gain access to lower rates.

See the program’s guidelines to see if you qualify.

Previous post:

Next post: