Sarah Brady is a personal finance writer and credit expert who's been dedicated to helping individuals and entrepreneurs improve their financial wellness since 2013. Sarah's writing is informed first and foremost by her past work as an NFCC-certified.
Sarah Brady Personal Finance Expert WriterSarah Brady is a personal finance writer and credit expert who's been dedicated to helping individuals and entrepreneurs improve their financial wellness since 2013. Sarah's writing is informed first and foremost by her past work as an NFCC-certified.
Written By Sarah Brady Personal Finance Expert WriterSarah Brady is a personal finance writer and credit expert who's been dedicated to helping individuals and entrepreneurs improve their financial wellness since 2013. Sarah's writing is informed first and foremost by her past work as an NFCC-certified.
Sarah Brady Personal Finance Expert WriterSarah Brady is a personal finance writer and credit expert who's been dedicated to helping individuals and entrepreneurs improve their financial wellness since 2013. Sarah's writing is informed first and foremost by her past work as an NFCC-certified.
Personal Finance Expert Writer Deborah Kearns Mortgages ExpertWith two decades of experience as a respected journalist and communications leader in the mortgage field, Deborah Kearns is passionate about helping consumers make smart homeownership and personal finance decisions. Her work has appeared in The New Y.
Deborah Kearns Mortgages ExpertWith two decades of experience as a respected journalist and communications leader in the mortgage field, Deborah Kearns is passionate about helping consumers make smart homeownership and personal finance decisions. Her work has appeared in The New Y.
Deborah Kearns Mortgages ExpertWith two decades of experience as a respected journalist and communications leader in the mortgage field, Deborah Kearns is passionate about helping consumers make smart homeownership and personal finance decisions. Her work has appeared in The New Y.
Deborah Kearns Mortgages ExpertWith two decades of experience as a respected journalist and communications leader in the mortgage field, Deborah Kearns is passionate about helping consumers make smart homeownership and personal finance decisions. Her work has appeared in The New Y.
Updated: Jun 9, 2023, 2:20pm
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Refinancing your mortgage can be difficult if you have poor credit or a high debt-to-income (DTI) ratio. It can be practically impossible if you’re underwater—meaning your property is worth less than you owe on your mortgage.
Fortunately, underwater borrowers with mortgages backed by Freddie Mac or Fannie Mae may be able to get special relief. While the federal program known as the Home Affordable Refinance Program (HARP) is no longer available, eligible homeowners can still use the programs that replaced HARP.
HARP was created by the Federal Housing Finance Agency (FHFA) in 2009, through the Obama Administration’s Making Home Affordable program. Its purpose was to help homeowners refinance their mortgages, particularly those who were left with little to no equity after the housing market crash, but who were still keeping up with their mortgage payments.
Between 2009 and 2018, when the program sunsetted, nearly 3.5 million households used HARP refinancing to get into lower interest rates or make their mortgages otherwise more affordable.
As of Q4 2022, there were 1.2 million U.S. mortgages underwater. While HARP is no longer around to help homeowners refinance, the FHFA has two replacement programs that offer similar relief:
Both HLTV and ERR can help borrowers who are underwater, but the new programs are different from their predecessor in one significant way. The minimum loan-to-value (LTV) ratio for a single-family home is now 97.01%—up from HARP’s 80%.
To calculate the LTV on your mortgage, divide the amount you owe by the estimated value of your home. For example, if you owe $200,000 and your home is worth $180,000, your LTV is 1.11 (200,000/180,000), or 111%.
If you apply for HTV and ERR, you can only be approved if the program does at least one of the following for your loan:
In addition to meeting LTV requirements, applicants will need to have a mostly positive payment history on their mortgage in order to qualify. Here are some additional eligibility requirements:
Refinancing your mortgage can reduce your monthly expenses, but it can also be a costly and time-consuming process. Before you apply for HLTV or ERR, consider these pros and cons.
If you’re unsatisfied with your mortgage terms, it’s worth checking into your eligibility for HTV or ERR, even if you didn’t qualify for HARP. For some homeowners who are underwater, this could be the only way to refinance, since most lenders require an LTV of 80% or lower in order to approve a traditional refinance.
If you need help with your mortgage but you’re not eligible for HTV or ERR, consider other FHFA homeowner programs like the Low-Income Borrower Refinance option, or check out your state’s Homeowner Assistance Fund (HAF). You could also ask your mortgage servicer for a loan modification, which (temporarily or permanently) changes some terms of your home loan if you’re struggling to make monthly payments.
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Personal Finance Expert WriterSarah Brady is a personal finance writer and credit expert who's been dedicated to helping individuals and entrepreneurs improve their financial wellness since 2013. Sarah's writing is informed first and foremost by her past work as an NFCC-certified credit counselor, a role that involved teaching workshops on every aspect of personal finance and coaching thousands of clients on how to improve their credit. She is also a former HUD-certified housing counselor and educator for the city of San Francisco's affordable home buyer programs.
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