Coming to a lender near you, the Home Affordable Refinance Program (HARP) is new and improved.
The original HARP program was designed to allow people who currently have a mortgage that is held by Fannie Mae or Freddie Mac to refinance to a lower interest rate even if they have little to no equity in their home.
The program was limited, however, in that it required a homeowner owe no more than 25% more than the home’s current value on the mortgage. This rule prevented many borrowers who were severely underwater from taking advantage of the lower rate environment. With HARP 2.0, this rule has been removed providing no equity limitation.
This comes as welcome news for homeowners who have felt stuck in a property with no equity at a high rate of interest. Before, the only option was to stick it out or walk away from the property. HARP 2.0 offers these homeowners some relief and may help keep some short sales and REOs off the books, which erode values in our neighborhoods.