HARP

• The federal government in 2009 unveiled its Home Affordable Refinance Program, otherwise known as HARP. This program allows struggling homeowners to refinance and lower their mortgage payments even if they don't have 20 percent equity. Under the program, the government provides financial bonuses to those lenders who refinance such loans. If you don't have the equity you need for a conventional refinance, you can call your existing mortgage lender -- for HARP you must refinance with the lender already servicing your loan -- and ask for a government refinance.
  
  

Falling Home Values

• The government deemed HARP necessary because so many homeowners saw their home values fall following the real estate crash that began in late 2006. Owners who bought in 2004, 2005 or early 2006, especially, were at high risk of having negative equity. This means that their home values fell so steeply that they owed more on their mortgage loans than what their homes were worth. If you're facing the same situation, a HARP refinance might be an option.
  
  

Equity Levels

• You must meet certain requirements to participate in HARP. The program is open only to homeowners who owe as much as 125 percent of their home's value on their mortgage loans. As an example, if you owe $125,000 on a home valued at $100,000, you are still eligible for a HARP refinance. If you owe $130,000 on that same home, you won't be. Your lender will send a real estate appraiser to your house to calculate its current value before approving your request for a HARP-assisted refinance.
  
  

Other Requirements

• HARP also has other eligibility requirements. You must be seeking a refinance for a house that includes just one to four living units. You must have a mortgage loan owned or guaranteed by Freddie Mac or Fannie Mae. And you must be current -- no more than 30 days late during the last 12 months -- on your mortgage loan payments.