HAMP Versus HARP

By Steven Roberts Updated on 7/21/2017

A modification to your loan could save you the trouble of processing a new loan and the high fees associated. A modification is available through private lenders, but if you qualify, the government's (HAMP) Home Affordable Modification Program is the most beneficial option. 

Homeowners can modify their loan at no cost, while significantly reducing the interest rate.

HAMP Eligibility

Essentially, the federal government created the HAMP program to aid homeowners who are at risk of foreclosure. HAMP does this by subsidizing lender modifications to borrower home mortgages. To qualify for a HAMP modification, you must satisfy the following requirements:

• The home must be your primary residence.
• The mortgage must be less than or equal to $729,750.
• The mortgage must have been closed before January 1, 2009.
• The mortgage payment is less than 31% of your monthly income.
• Documented hardship from unexpected debt or decrease in income.
• Reasonable income that will satisfy payments after the modification.

Lenders will require documentation regarding income, outstanding debt, assets and evidence of financial hardship before granting borrowers a preliminary and permanent loan modification. 

On average, you can save approximately $500 monthly through a HAMP modification.

HARP Eligibility

The Home Affordability Refinance Program was designed to provide financial relief for underwater homeowners, who owe more than their home’s value as a result of the burst of the housing market bubble. 

Through this program, these formerly ineligible borrowers can refinance to capitalize on low mortgage rates. 

Unlike the HAMP program, HARP does not require you to be at risk of foreclosure or experiencing financial hardship; rather, to qualify for HARP, you must satisfy the following HARP requirements:

• Ownership of less than 20% of the equity in the home.
• No delinquent payments within six months of application.
• Fannie Mae or Freddie Mac owned before June 1, 2009.
• Mortgage was never refinanced previously.