The Home Affordable Refinance Program, dubbed HARP, was first introduced in 2009 to help property owners refinance into lower interest rates. As property values fell across the country toward the end of the last decade, many who had mortgages with higher fixed rates found they could not HARP 3.0refinance due to the lack of equity in the property. Conventional refinance loans historically require at least 10 percent in equity before refinance is allowed, 20 to 25 percent for rentals.


The original HARP program removed this barrier and allowed lenders to approve refinance applications as long as the new loan amount didn’t exceed 125 percent of the current market value of the home. If for example the new loan was $100,000 the property could appraise no lower than $75,000. This and other requirements kept many would-be refinance candidates still on the sideline.

HARP 2.0 was introduced to address these problems and the program actually eliminated the loan to value requirement altogether—no appraisal needed. As long as the loan was originated before June 1, 2009 and currently owned by Fannie Mae or Freddie Mac, borrowers could refinance a fixed rate near 6.5 percent to rates as low as 3.50 percent, regardless of how “upside down” the mortgage.

Is HARP 3.0 on the horizon? It’s very possible as the replacement of the Federal Housing Administration has long been a consumer advocate, concentrating more on extending credit to those who need it and to keep borrowers in their homes. Among other enhancements, HARP 3.0 would waive the origination date requirement and remove the stipulation that the loan be owned by Fannie or Freddie. This change along could affect millions of properties.

This popular program is not only for a primary residence but real estate investors can take advantage of HARP as well. If you purchased and financed a property and the interest rate was 5.50 percent or greater, you should contact a mortgage company and talk about the HARP program for your rentals. In one fell swoop, you could seriously upgrade your cash flow.