Over 3.4 million homeowners have been helped through the Home Affordable Refinance Program (HARP®) since its inception in 2009 and it's estimated that well over 300,000 homeowners are still eligible to refinance through the program and begin saving today. But, many of these homeowners are sitting on the sidelines, even after significant enhancements to the program, due to common myths and misconceptions.
Let's tackle some of the biggest myths on the street about HARP, the federal program designed to help homeowners who are underwater on their mortgage take advantage of lower mortgage rates and reap other refinance benefits.
Myth #1: I've had my loan for many years and with HARP I'd have to start all over again with a 30–year mortgage.
Fact: You can refinance into fixed–rate mortgages with terms anywhere from 10 years to 30 years. Check with your lender to see if they offer shorter terms – it's likely they do.
Myth #2: I'm receiving too many solicitations to help me refinance. They must be scams.
Fact: Many homeowners are wary of the numerous solicitations they receive to refinance their mortgage. Legitimate offers often have specific information identifying your current mortgage, including your loan number. If you are unsure if an offer is legitimate, we recommend calling your lender before responding to third–party companies that advertise themselves as "mortgage experts." If you do suspect that an offer is a scam, report it immediately by calling 888-995-HOPE.
Myth #3: I am really underwater on my mortgage. HARP can't be for homeowners like me.
Fact: HARP has been enhanced several times since the program was first introduced in 2009. Now, HARP doesn't have any loan–to–value restrictions for fixed–rate mortgages, so even if you owe much more on your home than it is worth, you may be eligible.
Myth #4: I recently lost my job, so no one is going to help me refinance through HARP.
Fact: If you are pursuing HARP through your existing lender, at a minimum you will need to show a source of income for at least one borrower on the loan. Alternatively, if you have available funds equal to at least 12 months of principal, interest, taxes and insurance you may be eligible. If you are looking to refinance through HARP with a new lender, the income documentation and qualifications have been simplified. In either case, we recommend you reach out to your lender to discuss your options.
Myth #5: My lender doesn't offer HARP, so I can't refinance through the program.
Fact: If your existing lender doesn't offer HARP, there are other lenders that you can contact for help. We encourage you to review Freddie Mac's and Fannie Mae's lists of participating HARP lenders to find a lender that can discuss your options and eligibility with you.
Myth #6: I have an adjustable–rate mortgage (ARM) so I am not eligible.
Fact: HARP was created to help homeowners like you transition into mortgages with more stable and sustainable terms. With rates still at historic lows, consider refinancing into a fixed–rate mortgage where you'll have the security of knowing what your payment will be for the entire term of the loan.
Myth #7: I can't refinance because my property is a condo.
Fact: HARP allows you to refinance, even if your property is a condo. In fact, HARP also allows you to refinance investment properties or second homes.
Myth #8: I don't have enough cash to pay closing costs, so I can't refinance through HARP.
Fact: Not all homeowners will have to pay out–of–pocket closing costs with a HARP refinance. Talk with your lender about rolling your closing costs – and any other monies due at closing – into your new mortgage.
Myth #9: HARP is only for homeowners who are behind on their payments and in danger of foreclosure.
Fact: HARP is a refinance program, intended specifically for homeowners who are current on their mortgage but underwater and unable to refinance through a traditional refinance.
If you think you may be eligible for HARP after debunking some of the more common myths, the time to act is now as the program expires on December 31, 2016! Reach out to your lender and let them know you are interested in getting started with HARP today.