Am I getting ripped off on a HARP refinance?

By Michael Jensen, Mortgage and Finance Guru

Edited by Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience

Updated October 20, 2020

The HARP 2.0 Program is no longer offered and was replaced by the Enhanced Relief Refinance Program and the High LTV Refinance Option Program in 2019.  We recommend that you review these programs if you want to refinance your mortgage but have limited homeowners equity.  We include the Q&A article below for informational purposes only.

There are several common ways borrowers can get ripped off on a HARP refinance.  We outline these scenarios below so that you can avoid them and get the refinance that is right for you.

Minimum Loan Amount.  Some lenders may apply a minimum mortgage amount or charge you extra fees if your loan amount is small.  The lender may impose a minimum loan amount but this is not a HARP program guideline.

Your new loan amount should only match the amount you need to refinance your current mortgage and you should try to avoid any extra costs because your loan may be smaller.  If a lender attempts to charge you higher costs due to the size of your loan, contact other lenders.

The Lender Asks You to Pay Discount Points.  There are no HARP rules that require borrowers to pay discount points. Again, the lender may request that you pay discount points but that is not mandated by HARP Program guidelines and it is completely up to you, the borrower, to decide if you want to pay points.

Charge You a High Mortgage Rate.  Because some borrowers feel they have limited refinance options, some lenders may try to exploit borrowers by charging a higher interest rate.  Just because you do not have a lot of equity in your home does not mean you need to pay a higher mortgage rate to refinance your loan. 

Regardless of if you are refinancing with HARP or another loan program we highly recommend that you shop multiple lenders to find the lowest rate and fees.  You can contact multiple lenders in the table below to compare proposals and find the best refinance terms.

If you are in the middle of the refinance process and have run into any of the issues outlined above, you should consider changing lenders.  For a refinance, you can cancel or rescind your loan and work with a different lender up to three days after you sign your loan documents, which is the last phase in the mortgage process.  So basically you have until the very end of the refinance process to change lenders.

If you decide to switch lenders you may be out certain upfront fees but choosing a new lender that offers better loan terms such as a lower rate or closing costs can save you a significant amount of money in both the short and long terms.

The final point we want to highlight is that if you are considering changing lenders make sure that the new lender can process your mortgage fast enough to meet your closing timetable. You do not want to delay refinance process too long because you switched lenders.