Why Now Is the Time for a HARP Refinance


Underwater on your mortgage and still haven't refinanced? You may think that you missed the window or are not eligible, but with interest rates still near historic lows and an expanded Home Affordable Refinance Program (HARP) it may be within your reach.

While it's true that home prices have risen steadily over the past year and a half, approximately 24 percent of American homeowners are still underwater on their mortgages. This is especially true of those living in areas hardest hit by the housing and economic crisis. The Federal Housing Finance Agency (FHFA) estimates that there are between 1 million and 2 million borrowers eligible for HARP who are underwater are paying above-market interest rates. You could be one of them.

[Thinking about refinancing your mortgage? Click to compare interest rates from multiple lenders now.]

Why do it?

Borrowers nationwide are reaping significant savings — either by lowering their payments, reducing their interest rates and/or securing a fixed rate. Homeowners who refinanced through HARP during the first quarter of 2013 will save an average of $4,300 in interest payments during the first 12 months.

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Take homeowners Josh and Kelly in Tampa, FL, who were $80,000 underwater on their mortgage. By refinancing under HARP last year, they were able to lower their interest rate by nearly 2 percent, reducing their monthly payments by about $520.

And HARP is now simpler than ever. So if you were already turned down before, try again because recent changes to the program are designed to help more homeowners no matter how far your home has fallen in value.

Why now?

While the program has been extended through the end of 2015, the time to act is now!
Interest rates on 30-year fixed mortgages have increased nearly a full percentage point since mid-May, and we do not expect them to return to the historic lows seen late last year and the first part of 2013.

However, mortgage interest rates are still comparatively low. Looking back to the mid-2000s, the average 30-year fixed interest rate was around 6 percent. Freddie Mac's chief economist expects rates on the 30-year fixed rate mortgage to remain around 4.5 percent for the rest of the year.

[Click to shop around and compare mortgage interest rates.]

Given that nearly half of the 30-year fixed rate mortgages owned or guaranteed by Freddie Mac or Fannie Mae have rates of 5 percent or greater, lots of homeowners stand to benefit from acting now.

Get started

More than 2.8 million families have already benefited from the program, and you could, too. If you are current on your payments and your mortgage is owned by Freddie Mac or Fannie Mae, get started now by following these steps:

  1. Determine if Freddie Mac or Fannie Mae owns your loan.
  2. Gather your financial information.
  3. Contact your mortgage company or a participating HARP lender.


Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.


About the author:

Tracy Hagen Mooney is senior vice president of Single-Family Servicing and Real Estate Owned (REO) at Freddie Mac. She manages the company's relationships with more than 1,400 servicers to preserve homeownership across America and facilitate positive servicing industry change. Follow Freddie Mac on Twitter or join us on Facebook.

This website contains news and information created and maintained by a private organization. FHFA is not responsible for controlling or guaranteeing the accuracy or completeness of this outside information. Further, the inclusion of any advertisements or other links does not reflect their importance, nor is it intended to endorse any products or services offered.

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