Source: Investopedia —
When interest rates fall, many homeowners will refinance their mortgage to lock in a lower interest rate, which can reduce a borrower’s monthly payment or allow a homeowner to build equity more quickly. However, one group of homeowners who typically have trouble refinancing are those in negative equity. This means they owe more on their mortgage than what their home is presently worth. In the first quarter of 2020, about 1.8 million homes were in negative equity, representing 3.4% of all mortgaged properties.
In the past, borrowers with underwater mortgages could take advantage of lower interest rates by refinancing through the Home Affordable Refinance Program (HARP). However, this program expired at the end 2018.2
In this article, we will discuss the benefits that HARP provided to homeowners, in addition to available existing options for homeowners looking to refinance their mortgages.
What Is the HARP Loan Program?
HARP was a government program established in April 2009 under the Federal Housing Finance Agency (FHFA) in response to the 2007-08 financial crisis. The idea was to help homeowners refinance loans on properties that were worth less than their outstanding mortgage. Approximately 3.45 million borrowers took advantage of the program.
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