The Home Affordable Refinance Program Is Ending Again, For Real This Time

In the wake of the housing crisis and plunging home values, too many Americans were left owing more on their homes than the homes were worth – leaving them "underwater" with loan-to-value (LTV) ratios greater than 100 percent. HARP stepped in to help homeowners with LTV ratios greater than 80 percent refinance loans and find manageable monthly payment terms.

To be eligible for a HARP loan, your mortgage must have originated no later than May 31, 2009. You must be current on your payments — no payments late by thirty days or more in the last six months and only one within the past year — and your LTV must be 80 percent or higher.

In addition, your loan must be owned by either Fannie Mae or Freddie Mac. You can confirm this using the loan-lookup tools on each agency's website.

Many homeowners who qualified for HARP have already taken advantage of the program. Generally, refinancing only makes sense when interest rates are low compared to your current mortgage rate. Rates have risen steadily since 2012 with thirty-year fixed mortgage rates now hovering near 5 percent, the highest they've been since early 2011. However, the Federal Housing Finance Agency (FHFA) estimated that over 143,000 homeowners could benefit from the last HARP extension.

If you're one of the 143,000 who still qualify, you must take advantage of HARP before the December deadline. The new programs are only for loans originated on October 1, 2017, or after. Unfortunately, if your loan origination was between the two cutoff dates (from June 1, 2009, to September 30, 2017), neither option applies. You don't qualify for either program and are stuck with conventional refinancing paths.

The replacement programs are similar to HARP, with the same qualification restrictions on delinquent payments but with a few important differences aside from loan origination dates.

You can't choose between the two programs. Fannie Mae-owned loans must be refinanced through their High Loan-to-Value Refinance Option, while Freddie Mac-owned loans must be refinanced through their Enhanced Relief Refinance program.

In either program, borrowers must show some benefit from refinancing such as a lower interest rate, shorter term, reduced principal/interest payments, or moving from an adjustable-rate loan to a fixed-rate loan – although if you don't see one of these advantages, why would you refinance?

Your mortgage to be refinanced must be at least fifteen months old before you can apply for either refinance program. You can use either program more than once as long as the fifteen-month criterion holds, and you meet all other re-qualifications – but you can't refinance an original HARP loan with either program.

Check each agency's website for LTV restrictions and other details on the Enhanced Relief Refinance or the High Loan-to-Value Refinance Option, whichever may apply to your loan.

A mortgage with a high LTV ratio and barely-affordable payments leaves you with no room for financial error. HARP or its replacement programs could be your path to more manageable monthly payments and greater financial stability.

Even though HARP was extended seven times and will be replaced with similar programs, you can't count on good high-LTV mortgage options to be around forever. If you qualify for any LTV program, especially HARP, take advantage of it while you can.

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