The Obama Refi Program, the affectionate moniker for the Home Affordable Refinance Program “HARP” was launched in 2009 as part of the economic stimulus plan following the real estate market collapse of 2008. The program has gone through a number of iterations and extensions since launching back then, but with a change in administration, Trump is now in charge, the HARP program is set to expire in September of 2017. So if you have been debating whether or not to refinance your home through the Obama Refinance Program now is the time to do so.
Obama Refi Program: What Is It Exactly?
The HARP program was created to help homeowners who were underwater on their homes, meaning they owed more than their homes were worth. Through the program, homeowners with little to no equity finally had the opportunity to refinance their mortgage at super low interest rates. Typical loan-to-value requirements were eased and private mortgage insurance requirements were waived for many under the Obama Refi Program.
So to summarize, homeowners could lower their mortgage rate, mortgage payment and get rid of private mortgage insurance through HARP. And since it’s inception over 3.5 million homeowners have successfully refinanced under HARP with over a quarter-million still eligible according to the Federal Housing Finance Agency (FHFA).
Obama Refi Program: How Do I Qualify?
According to the HARP website the following are the requirements for the Obama Refi Program:
Your loan is owned or backed by Freddie Mac or Fannie Mae.
Your current LTV is greater than 80%. (You can check your LTV here.)
You are current on your mortgage payments—meaning no delinquencies in the prior six months and at most one delinquency in the prior 12 months.
Your mortgage was originated on or before May 31, 2009.
To really maximize the effect of a HARP refinance you should have over 10 years left on your mortgage with a remaining balance exceeding $50,000 and a mortgage interest rate at least 150 basis points (1.5%) above the current market rates.
Editor’s Note: Click here to find out if you qualify to take advantage of the Obama Refinance Program or other low rate mortgage programs.
Obama Refi Program: The End is Near, What’s Next?
The Obama Refi Program waste to expire in December of 2016 but the FHFA decided to extend the program until September of 2017 “to ensure there were not gaps in access to credit so that these homeowners would continue to have an option to refinance”. So there are still a few months left to refinance through HARP before the replacement program begins in October.
The new replacement program is a big unknown at this point. This “Trump Refi Program” could roll back all of the benefits that made the Obama Refi Program so attractive to struggling homeowners. Although interest rates have increased some since the US Presidential election, they still are residing near all time historic lows. With the uncertainty in future interest rates and the uncertainty that comes along with a new Trump Refi Program taking advantage of relatively low rates through HARP could prove to be a wise financial decision.
President Trump Takes First Step in Erasing The Obama Refi Program
On Trump’s first day in office his administration revoked one of Obama’s last minute economic policy actions. The new Trump administration stated its intent to cancel a proposed reduction in the Federal Housing Administration’s (FHA) annual fee for most borrowers. The proposed reduction would have cut the annual premium for someone borrowing $200,000 by $500 in the first year. Republicans have argued in the past that reductions put taxpayers at risk by lowering the funds the FHA has to deal with mortgage defaults. The FHA sells insurance to protect against mortgage defaults. It is popular amongst first-time home buyers because it allows borrowers to make a down payment as low as 3.50% with a credit score of 580.
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