HARP Refinancing: The Pros and Cons

The Home Affordable Refinance Program (HARP) is a U.S. federal program designed to help homeowners who are struggling with their current mortgages. Before you apply for refinancing through HARP, you should consider the advantages and disadvantages of this type of loan.


  • Lower Payments One of the reasons that borrowers seek HARP refinancing is because they will receive lower monthly payments. The rates and terms of HARP refinancing are determined by borrowers’ credit scores and histories. Borrowers with good credit scores and low-interest rates on their new HARP loans may be able to make lower payments than those on their current mortgage. Requesting longer terms for repayment lowers payments further.
  • Cash Out One of the benefits of HARP refinancing is that it often allows you to borrow more than your original loan. If you need money for an emergency, applying for HARP refinancing can provide the cash you need. You can also lower your overall payments by consolidating many bills into one loan.
  • Extended Due Date Making monthly payments on your mortgage can be quite challenging, especially if you have an emergency. Late payments can harm your credit. HARP refinancing programs can help you make timely payments on your mortgage and avoid harming your credit. The payment date is extended when you obtain HARP refinancing.
  • Tax Advantages HARP refinancing allows you to deduct monthly payments on your mortgage, provided that the new loan does not exceed the value of the original. In addition, HARP refinancing allows you to write off discount points over the life of the loan, unlike your original loan, which likely only allows you to write off all points at once when taking out the loan. HARP refinancing programs allow you to deduct points that you were not previously able to.


  • Qualification Clients can choose HARP refinancing or select new lenders for their mortgage loans. However, having a loan does not automatically qualify you for HARP refinancing programs. This type of mortgage refinance creates new home loans and allows your original lender to pay off the old mortgage. Even if you have enjoyed a good relationship with your previous mortgage firm and have never missed a payment, you will have to complete a HARP loan application to qualify for the loan. Your credit and income will be reviewed, and the loan can be denied if you do not qualify.

Expenses HARP refinancing requires applicants to have hands-on cash to qualify for the new mortgage. There are many fees involved, including closing and settlement costs, as well as costs of home appraisal and application fees. You can avoid paying the closing costs out-of-pocket by asking for the payment to be attached to the mortgage balance. However, you will be required to make higher monthly payments if you add money to your mortgage balance.

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Posted on May 22, 2023