Federal Stimulus Program Forces Banks To Offer Better Terms On Refinancings

The mortgage experts at LendingTree.com may be able to help homeowners qualify for a federal refinancing program that has many banks nervous, and has already resulted in hundreds of millions of dollars in savings for American households.

Hailed by some as a "stimulus package for the middle class", this brilliant Federal Government refinance program is called the Home Affordable Refinance Program (HARP). Created as a part of the bailout during the housing crisis, the program could still be used by hundreds of thousands of homeowners to lower their mortgage payments. Savings can be as much as $4,264 each year.

Clearly, banks aren't happy about the existence of the program, so what little advertising has been spent promoting it's existence has mostly been done by the government, and on a limited budget.

While banks are likely hoping the program will expire before too many more Americans are able to find out about it, housing authorities are making a last push to get as many people into the program as can benefit from it before it expires in 2016.

As many as a million American homeowners could still use this program to reduce their monthly mortgage payments. Unfortunately, many either don't know about the program or don't believe it's real. It is real, it was created by the US government and by law there is NO COST to apply.
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Why HARP Is Often Called A Stimulus Package For The Middle Class

The reasoning was simple: during the housing crisis, millions of Americans were struggling to make their mortgage payments. Many households stopped spending on anything other than the bare necessities in order to make ends meet and stay in their homes. This hurt the economy as folks spend less on other goods and services.

So the government stepped in and created HARP in order to help households to lower their monthly mortgage payments and keep their homes. Folks who received HARP were able to spend again on things like clothes and vacations, boosting the economy.

Yet while the program was designed for those in distress, there is nothing in the regulations that says a homeowner needs to be in distress. Anyone can apply, and just about anyone can use the extra savings. The only issue here is that because HARP was originally created in response to the housing crisis, it is a temporary program set to expire at the end of 2016. Those homeowner's who don't get in before the deadline will no longer be able to use HARP to cut their mortgage payments.

HARP Facts

  • HARP makes it easier for homeowners to refinance at lower rates, resulting in monthly savings.
  • HARP will expire in 2016
  • Homeowners have the option to shop multiple lenders under the program rules, which can generally result in even more savings.
  • The average savings for those who use HARP = $250 a month.
  • The program even allows for homeowners to take extra cash out to pay for things like education, home improvement or other bills.

So How Do I Get Started?

LendingTree always recommends shopping multiple different lenders, and we've got a lot of research showing that those who see more than one mortgage offer save an average of $14k over the life of the loan. That's in addition to what homeowners may save using HARP. Following our motto of "When Banks Compete You Win" we have created our mortgage comparison shopping experience in order to help you maximize the total amount you can save.

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Potential Savings

What a 2.25% difference really means

$200K loan @5.5%

$1,136 per month

400,960 total cost

200k loan @ 3.25%

$870 per month

313,200 total cost

$226 per month savings $95,7060 total savings