Refinancing a home is equivalent to resetting a mortgage. It’s a scheme that can help you secure better loan terms, such as a lower interest rate or cheaper monthly payments. However, not everyone, especially those with insufficient equity on their houses, is eligible for conventional refinancing.
For the latter, special housing programs were instituted to help with refinancing. One of them was the Home Affordable Refinance Program (HARP), which was established in 2009 to help struggling homeowners amid the housing market meltdown in the United States.
However, due to specific factors, this program was phased out in 2018 and replaced by new and improved ones. This development brings us to the focus of this guide – the HARP replacement programs.
In the paragraphs below, we’ll be looking at some notable HARP replacement programs for 2022, what you need to know about them, and how you can benefit.
A Brief Background on the HARP Loan Program
Before delving into the HARP replacement programs, we need to answer the question, “what is the HARP program?” In April 2009, the Federal Housing Finance Agency (FHFA) developed the Home Affordable Refinance Program (HARP) as a government initiative in response to the financial crisis that rocked the United States between 2007 and 2008.
The goal was to assist homeowners who needed to refinance loans on houses that were worth less than their current mortgage balance. Also, HARP was designed for borrowers with a loan-to-value ratio (LTV) of more than 80 percent.
Since these borrowers typically have problems refinancing due to a lack of equity on their homes, they’re unable to benefit from lower interest rates. That’s where the HARP program mortgages came to their rescue.
The HARP program was billed to stop at the end of 2016, but the government decided to extend it for another two years, after which it was officially terminated in 2018.
HARP Loan Program Alternatives
Although the HARP loan program is no longer available, many new programs have been established to help distressed borrowers refinance their homes. You can get a detailed article about HARP replacement program at HomesByArdor.com. Discussed below are some of the most prominent HARP replacement programs for 2022.
1. Fannie Mae High LTV Refinance Program
The Fannie Mae high LTV refinance program is intended for borrowers that are consistently paying their existing Fannie Mae mortgage but have a loan-to-value (LTV) ratio that exceeds the maximum allowed for a conventional limited cash-out refinance.
This could be a suitable option for someone wishing to refinance a conventional loan with a high loan-to-value ratio of at least 97.01 percent.
The basic eligibility criteria for this program include:
- You must have a mortgage that originated on or after October 1, 2017. Therefore, examine your loan documentation to see when your mortgage was finalized
- You must already have a Fannie Mae loan
- You must remortgage in a way that benefits you
- You must have a minimum loan-to-value (LTV) ratio established by Fannie Mae
2. Freddie Mac Enhanced Relief Refinance Program
The Freddie Mac Enhanced Relief Refinance program is for borrowers with current Freddie Mac mortgages who are making timely payments. It’s also applicable to those that are unable to take advantage of the conventional Freddie Mac “no cash-out” refinance offering because the new mortgage exceeds the maximum loan-to-value (LTV) ratio.
Relief refinance benefits you can get from this program include a reduction in your mortgage rate or monthly payment, switching from an adjustable-rate mortgage to a fixed-rate mortgage, as well as the potential to shorten the term of your loan.
The basic requirements to apply for this program include:
- Freddie Mac must be the owner of your present mortgage
- For a one-unit, owner-occupied home, your loan-to-value ratio must be at least 97.01 percent
- Your present loan mustn’t be old. It must have been created on or after November 1, 2018, to qualify
- Your present financing must have been in place for at least 15 months to consider it “seasoned.” This stipulation implies that your current loan’s origination date and the new loan’s origination date must be at least 15 months apart
- You must not have had any 30-day late payments in the previous six months, and no more than once in the previous twelve months
3. FHA Streamline Refinance Program
The FHA streamline refinance program allows homeowners with FHA-backed mortgages to refinance in quicker time, with less fuss, and with not much paperwork. You won’t have to go through the FHA appraisal process again with a simplified refinance because the FHA has already appraised the property.
Only homeowners who already have FHA loans are eligible for the streamlined program, but that doesn’t mean you have to renew with your current lender. Lenders may have different FHA loan criteria and fees. You can find the best bargain by comparing quotes from many different FHA streamline refinance lenders.
The basic eligibility requirements to apply for this program include:
- You must already have an FHA-insured loan
- Your mortgage must be paid up to date. If your mortgage is delinquent within three months of applying, the FHA will not refinance it
- You must guarantee that your refinance provides a measurable advantage. Depending on the loan type, interest rate, and new loan duration, the benefit may vary
4. VA Interest Rate Reduction Refinance Program
VA IRRRL is a financing program that allows borrowers to refinance their debt at a reduced interest rate, shorten their loan term, or convert an adjustable-rate mortgage to a fixed-rate mortgage.
The loan application process is simple and quick. Borrowers don’t need a minimum credit score or a new Certificate of Eligibility to qualify for an IRRRL, and there’s no need for a house or property appraisal. Furthermore, there’s no minimum income requirement or limit on how much money a borrower needs to make to be eligible for the VA streamline program.
The basic requirements for applying for this program include:
- You must currently have a VA loan
- In the last 12 months, you must not have had more than one 30-day late payment
- Ensure that your refinance meets the net tangible benefit (NTB) criteria
- Attest to the fact that you presently or formerly resided on the property
5. USDA Streamlined Assist Refinance Program
The Streamlined Assist Refinance is for USDA home loan borrowers with little or no equity. This program allows qualifying homeowners to refinance their existing USDA loans without having their debt-to-income and loan-to-value ratios computed or facing a credit check.
The basic eligibility criteria for this program include:
- Your mortgage must be a USDA-guaranteed direct loan
- Your mortgage must have been paid on time for the previous year
- Within the area where the property is located, your income can’t exceed the limit
- The interest rate on your refinanced mortgage can’t be higher than the rate on your existing mortgage
- When compared to your current monthly payment, you can save at least $50 on principal, interest, homeowners insurance, and real estate taxes.
How to Apply for a HARP Replacement Program
Having gone through some of these programs, let’s see how to apply for HARP replacement programs below.
- Look for a lender that offers a HARP-like program
- Fill out your details on the loan application form
- Provide necessary documents to back up your claim
- Examine the new loan terms and compare them to your existing mortgage payments
- If necessary, get a house appraisal
- Pay the closing charges and close the transaction if your lender approves your refinance request
FAQs on HARP Replacement Programs
What Are the Differences Between HARP and the Other Refinance Programs?
The HARP loan program differs from its replacement programs in a number of ways.
Homeowners that applied for HARP were limited to one usage of the program. On the other hand, there are no restrictions on how many times you can use HARP replacement programs, though there may be a waiting period or eligibility requirements.
Also, there’s no waiting period between when you closed on your mortgage and when you applied for a refinance under the HARP program. However, the reverse is the case for other refinance programs. Waiting periods help lenders assess a favorable payment history.
What Is the Credit Score Requirement for HARP Replacement Programs?
There’s no official minimum credit score for any of the HARP replacement programs listed above. However, mortgage lenders are free to set their credit requirements. So, if your credit score is a worry, find out what lenders want for the programs you’re interested in before applying.
Are the HARP Replacement Programs Legit?
The Federal Housing Finance Agency regulates HARP replacement programs, which are conducted by legitimate mortgage companies. Mortgage lenders throughout the country offer these plans.
Is It Possible to Refinance My HARP Loan?
According to the requirements for each program, if you used the HARP refinance program in the past, you are not qualified to use the replacement program.
There you have it! Above are some of the notable HARP replacement programs for 2022. These initiatives have helped millions of homeowners refinance their house mortgages before they ended. While HARP didn’t reduce the amount due, it did result in lower interest rates and monthly payments for debtors.
Although the program is no longer in existence, Fannie Mae, Freddie Mac, and mortgage lenders continue to give borrowers refinancing options. In essence, they have done remarkably well in offering similar services to borrowers.