Understanding HARP Eligibility

The Home Affordable Refinance Program (HARP) has made refinancing your home and escaping crushing mortgage debt an option for many homeowners since 2009. However, there are still plenty of questions many borrowers have when seeking to refinance. These questions concern everything from eligibility to the terms of refinancing. Answers to some common eligibility questions can be found below.

HARP and Mortgage Debt

If your home loan is owned or secured by the mortgage lenders Fannie Mae or Freddie Mac, it is technically eligible for refinancing under HARP. Other eligibility criteria apply, however. First, the loan and accompanying mortgage debt must have been owned by Freddie Mac or Fannie Mae prior to May 31, 2009; newer mortgages are ineligible. The mortgage debt cannot have been refinanced under the HARP program already (there are some exceptions to this, but as a general rule you cannot refinance twice under HARP).

In addition, the current loan-to-value ratio must be greater than 80%. This criterion is an important and often misunderstood one. It is what differentiates HARP from loan modification programs designed for those whose mortgage debt has put them underwater. In other words, you cannot owe more than your home is worth to qualify for refinancing under HARP; your loan cannot be for an amount more than 80% of the value of the home. If the home is worth $100,000, as an example, your mortgage debt must be $80,000 or less.

Another important criterion: your mortgage must be current and up-to-date in terms of payments, with no late payments in the past six months and only one in the past 12. There are a few other minor qualifications, but meeting these means you are most likely eligible for HARP refinancing and a reduced mortgage debt.