The 143,000+ people who qualify to refinance their house through HARP will need to decide if they want to use that cost-savings program or wait for the programs that will replace HARP later in 2018. If your mortgage is “underwater” – in other words, you owe more than your house is currently worth – HARP could save you a ton of money. Over 3 million people in your shoes have refinanced through HARP since 2009 and saved an average of $2,400 a year.

Before you refinance, you need to decide what will be in your best interests. You have three options when you refinance:

• Refinance through HARP before the program expires later this year
• Refinance through one of the new programs that will replace HARP in late 2018
• Stick with the mortgage you have

How to Qualify for HARP

• You must have a Fannie Mae or Freddie Mac mortgage.
• You must have taken out your loan by May 31, 2009.
• Your loan must be at least 80 percent of the current market value of your home.
• You have to be making your mortgage payments on time. You cannot be late on any payments during the last six months, and you must have no more than one late payment in the last year.

The New Programs That Will Replace HARP

When HARP expires, Fannie Mae will launch a refinance program called the High Loan-to-Value Refinance Option (HLRO). Freddie Mac will offer a refi program call the Enhanced Relief Refinance (ERR) at the same time. Far fewer people will qualify for these new programs because they require your loan balance to be at least 95 percent of the current value of your home. This ratio is called loan-to-value, or LTV.

All the people whose mortgage balances are between 80 and 94 percent of their home’s value will be stuck with their mortgages. If your LTV falls within this range, you may want to take a look at using the HARP program before it expires.

Also, HLRO and ERR will only help people who recently purchased their homes. If you bought your home before October 1, 2017, you cannot use these new programs to refinance your mortgage. People whose mortgages originated between May 31, 2009 and September 30, 2017 cannot use HARP, HLRO, or ERR.

Also, you must wait at least 15 months after Fannie Mae or Freddie Mac bought your loan before you can use one of the new programs. To qualify for HLRO and ERR, you must be up-to-date on your mortgage payments, have a squeaky-clean credit history with no 30-day delinquencies during the last six months, and have no more than one missed payment in the last year.

If you are struggling to make your mortgage payments and your current mortgage balance is at least 80 percent of the value of your house, you should explore whether refinancing through HARP would save you money. Since many of the people who qualify for HARP will not qualify for the two new refi programs that will replace HARP at the end of 2018, you should not wait until it is too late to see how much money you could save with a HARP refi.

For personalized advice, call us today at (619) 692-3630 to schedule your personal consultation with California Community Mortgage.