Dear PoP – Check Out HARP (Home Affordable Refinance Program) + Congress Renews $5000 DC First Time Homebuyer Credit

Photo by PoPville flickr user Brandon Kopp

“Dear PoP,

There’s something I wanted to pass on to the community. I just found out about a program called HARP (“Home Affordable Refinance Program “) that we are using to refinance our place without hardly any paperwork and at a much lower cost that a traditional refinance would likely have entailed. Basically, I think that, unless your rate is under 4.5%, you can probably reduce it using this program.

Just for comparison, for us, it will cost $395 up front (for the appraisal), and an additional 1600 rolled into the loan itself (various fees), but this means that we are able to shave some interest off our loan and save about $150 per month. So, yay, it pays for itself in less than two years and takes some pressure off each month. One of the reasons it works for us even in this crappy market is because, unlike a regular re-fi, the appraised value just needs to be within 125% of the loan amount (a regular re-fi requires 80% – which is often hard for people to get at the moment due to the reduction in home values across the board).

Anyways, it is always nice to save money, especially in this economy, and I thought I would pass on the info. For anyone who is interested I would suggest they call the bank that holds their mortgage and see what they say – I believe that by law they have to offer HARP options to you if you qualify (and unless you’ve been late on a mortgage payment in the past year, you probably do qualify). In fact, the only way we found out about this is because our bank called us out of the blue and told us about this program.

Some more info can be found here:

Anyone else use this program?

And thanks to DC Mud for sending word that, Congress Renews $5000 DC First Time Homebuyer Credit:

“The Federal tax credit is a $5,000 below-the-line credit against federal taxes for the purchase of a home in DC for taxpayers that did not own a principal residence in DC during the previous year.

The nationwide $8,000 tax credit for purchasing a home expired last summer.”

45 Comment

  • I’m pretty sure this is how we refinanced earlier this year. And we also had someone from the local office of our lender call up out of the blue. We’d had a disastrous effort at refinancing with a mortgage broker a few months before, so we were incredibly skeptical and told the guy that we had a whole lot of conditions he had to meet to before we’d spend any more time even talking about it. The offer was legitimate and we got our rate down by over a point, with up-front costs similar to what the OP cites.

    The key factor that might put a lot of people out of eligibility is that your current loan has to be owned or guaranteed by Fannie or Freddie Mac. We had no idea we qualified, because Wells Fargo is our lender, but apparently Fannie or Freddie was behind the scenes.

  • Yeah, I ran into the Fannie/Freddie thing too. How do you know if they’re involved in your mortgage? Do you have to call Wells Fargo? I hate calling them.

  • I was told by a Wells Fargo mortgage rep when I looked into this program months ago that condo owners face additional fees tacked on by Feddie and Fannie. Traditional housing apparently didn’t face these extra fees. The fees would be large enough to make refinancing my 7% 30-year fixed rate not worth it.

    Also, this is the program widely considered a failure in that it has helped far fewer folks refinance than intended. I’m glad to hear some locals could make use of it though.

  • As a first time homebuyer making less than 51K a year I received a 5 year tax abatement from the District. That saves me about $200 a month for my first 5 years.


    • This is the point I don’t understand. Why are all DC programs for lower income? Do they want to keep DC a low income city? DC is not a shining star for America, if not for the Federal Jobs very few people would live here, the schools are terrible and the city is crime laden. (say I’m lying). You would think the city would want as many high income people move to the city as possible. With high income you get generally (say I’m lying) a better educated group of people, a more community minded group of people, people who are not prone to committing crimes and people who offer the city a much higher income from taxes which make city services better for all. Why does DC not do something to help these people move into the city? This is the part I do not understand.

      • From what I understand the program was designed as an incentive for people to buy here rather than going outside the District. For my home price range less than 175K it made sense. I can’t say I agree with the program as a whole but I wasn’t about to turn it down. I could have made my mortgage either way, but having an extra 200 a month to put back into the house is nice.

        I don’t know enough about taxes or economics to argue for or against your point. But there are plenty of wealthy people living in DC and I don’t know if a tax break for wealthy homebuyers would increase that.

      • First of all, the mortgage interest deduction already favors the rich. Second, if you make $100k, you don’t need a 5k credit. You should be able to save that in two months.

        Think about it. The poor don’t pay any less than you for health insurance, groceries, housing (unless they’re Section 8), etc. You both have to spend the same amount to stay alive — above that level, you can afford to save $3k/month, while they’re struggling to sock away $500.

        A $5k credit allows a lot of lower-income DC residents to invest in a wealth building activity. That buoys the local housing market, while increasing property tax receipts. Everyone getting richer = good for everyone.

        • This sort of misses his point. The question is WHO you want living in the District. I take no stance on that, but @JC is right to the extent that if you want higher income folks to move into the District (which, at least for a while, was District Policy — 100k+ new residents under Williams), then it makes very little sense to offer this incentive (whether it’s needed or not, it is an incentive that factors in for people, rich or poor) only to lower income people.

          I don’t disagree with your points or progressive taxation generally, but it’s an interesting call at the District level. Just bringing in people — of ANY income level — will increase parts of the tax base: property tax and sales taxes, presumably, so that’s a push. But you’d also increase income tax rolls with higher income people and probably also be better insulated against additional strain on expenditure-side, as those folks tend to consume fewer social services.

          (Also, query whether home ownership truly is a wealth-building activity anymore, but that’s pure digression.)

          • Actually, I thought his point was so backward, it wasn’t worth addressing. But here it is —

            A $5k credit is not going to move in many six figure earners. Good schools will, dogs parks will, and lower crime will. You’d probably have to offer higher earners $10k+ to get them off the fence. Do we offer even wealthier folk $20k credits? Keep in mind the actual cost to generate a single wealthy new resident would be several times the actual cost of the credit, because people who had already been induced to move into DC could claim it. Thus, the ROI is pretty low.

            To address your point —

            If we’ve learned anything in the past 40 years in DC, it’s that a malnourished lower or middle class creates all kinds of problems — the financial burden of which is laid on the backs of wealthy folk. Decreasing this burden by lifting people into the middle class will decrease taxes over time — much better bait than a one time credit. Also, ancillary benefits are huge. Schools will improve without any additional investment in education. That’s worth a lot more to upper-middle class folks than than a dinky credit.

      • Bear

        The income limits for DC home purchase assistance programs and tax incentives are as follows (assuming a single person household):

        DC tax abatement (for property taxes and various taxes collected at closing): $53,780

        DC home buyers tax credit: $70,000 (for the full credit)

        Home purchase assistance program: $79,700 (sliding scale–those at the upper limit qualify only for the $4k closing cost assistance, as income falls the down payment assistance kicks in)

        I bought my house with the assistance of the tax abatement program and HPAP. I can’t claim the DC tax credit because I claimed the federal one.

        Since I qualified as “lower income” when I bought my home (at just over $50k a year), does that also mean that I am more inclined to commit crime, be uneducated, or neglect my community? Am I not worthy of assistance, despite the fact that I work hard and want to build a life in this city, but I just needed a little help to make that happen?

        I wouldn’t say you’re lying, but I would say that you are making sweeping generalizations about the people who take advantage of these programs. It’s not like everyone with a low income can walk in the door and get a home loan. You still have to go through all the requirements of qualifying for a mortgage–steady income, good credit, etc. The HPAP program requires home ownership training courses as well…and it has a foreclosure rate far below the average for traditional loans. I would suspect that the kinds of “low income” people you mention–crime-prone, uneducated, uninterested in community–would have a pretty difficult time qualifying for any of this.

        The only salient point you have is that people like me don’t bring in as much tax revenue for the city. It would have been wise to leave it at that.

      • The tax abatement program was one of DC’s programs that enabled me, a school teacher, to purchase a home in DC.

        That along with EAHP and HPAP, makes this city livable for those of us who want to do good, not necessarily make the most money possible.

  • I guess I need to call Wells Fargo. I have an FHA loan and I thought they were all approved through Freddie or Fannie but when I put my info in those two sites they say no.

    I’d like to save some money : )

    I also wish DC would take the income limits off their tax break. The harder I work the more I get screwed. If I make 58k and buy a house in NE I am spending the same amount of my salary on living as if I made 100K and bought a place in NW.

    • FHA loans are purchased by Ginnie Mae, which has always been owned by the government (while Freddie and Fannie are only fairly recently under receivership). For non-FHA loans, Fannie and Freddie are buying like 95% (not sure if that’s actually the percentage, but it’s the vast majority).

      I am thrilled that the first-time credit is back. It makes our decision to purchase in July (right before rates came down even further and the housing market slowed again) look a little better. It was depressing when we thought we also weren’t getting the credit.

  • Hmm, started to get excited (my loan is owned by Freddie Mac and since I bought in 2005 def nice that the loan can be up 125% of home value) and then saw that the home has to be your primary residence. So frustrating that I can’t refinance my rental house – I would have sold it when I moved but for the lousy real estate market. I imagine there are a lot of people in similar situations – want to sell but can’t so rent, but may be stuck in a bad/high rate loan and unable to refinance since it’s not their primary residence.

    • For HARP, the home you re-fi does NOT have to be your principal residence. Whoever told you that is flat out wrong. We are using HARP to re-fi an investment property in another state. Just FYI.

      (Meant to post this as a reply to this post)

  • Regarding the DC first time homebuyer credit keep in mind that eligibility for the credit is phased out for single filers making $70,000 to $90,000 (adjusted gross income) and joint filers making $110,000 to $130,000. For example, single filers making $70,000 (or joint filers making $110,000) would receive the entire credit; single filers making $80,000 (or joint filers making $120,000) would receive a $2,500 credit; single filers making $90,000 (or joint filers making $130,000) would not receive the credit.

    We purchased a home in DC last year and were not able to claim the credit given the income limits.

    • notlawd

      Was there an income qualification for the national credit? I don’t understand the benefit of adding this stipulation.

      • There was- I think it was a little higher though, something like $75k single/$150k married.

      • Actually- just looked it up- the income limits were $125k single/$225k married, so a lot higher.

        But the difference is that the DC credit is pretty much permanent, and it would be pretty expensive to keep such a generous program like that going year after year. The federal credit was a time-limited program by a Congress desperate to stop the housing market from sliding further.

        And as Tres pointed out above, those who make over $100k really shouldn’t need the assistance to buy a home.

        • You would be surprised. If I wanted to buy a house in SE then I would be sitting on easy street but only for about 24 hours at which time I would be robbed and murdered. If I want to live in a decent place with less crime and hassle then 100K does not go very far. 1/3 is spent on taxes, 1/3 is spend on Rent/Home Payment and the rest QUICKLY goes away for Car Payment, Student Loans Payback, Credit Card expenses accrued during school years, utilities, food, gas, insurance……… it adds up quick. The harder you work the more you pay for. Assistance should be equal just like everything supplied for the GVT, if you help one help all.

          • nice purposely inflammatory remark about SE.

            very smooth maestro.

          • Agreed. We make $170k and are having trouble finding a place in DC that we can afford, in a neighborhood that we feel comfortable walking around in after dark, that doesn’t involve an hour or more of commuting each way.

          • In retrospect, he doesn’t have grammar of someone of means. Or an adult, for that matter. My new theory is he’s a 16 year old typing away in his momma’s basement, providing us with the perfect example of what DC public schooling can produce.

          • Okay, but that’s just a problem with housing in DC being crazy expensive. DC gov’t giving you $5k isn’t going to change what kind of house you can afford. The credit is intended for those who wouldn’t be able to afford to buy ANYWHERE.

          • Alright let’s clear up a few facts

            1. I never said anything about anyone that can get the credit, I only commented on what you generally find in a group of people in higher salary ranges. What you came up with was out of your own mind so look into yourself for your own feelings.

            2. I do not worry about grammar on the local blog (no dis to POP, great blog) I say ain’t and y’all so naaaaaaaaaaa!

            3. I make right at 100k. I worked my butt off to get there, putting myself through college for a master’s degree while working full time. I am durn good at what I do so I can demand top of my pay field. I work for it and I earn it. I suppose I could rent out my second bedroom to a stranger or move my ho in to pay half the bills but for a single guy in the city doing it all yourself, things bes tights for a brotha! you feel me?

            4. What I want here is EQUALITY. Not to cut ANYBODY out. Equality, is that such a bad idea? I want a little help as much as the next guy. It took scraping up literally EVERY penny I had to buy my place in DC. I even had to sell a few things to make the last few thousand. This with moving left me broke, but a home owner. That 5K you say would do me no good could have helped to build back up my emergency reserves. It is not given as you say to help people who could not afford it otherwise because I could not afford it and I did not get it. I am just saying, keep it equal.

            Now, BAP! : )

  • Bear

    Another good DC program to consider is the Home Purchase Assistance Program (HPAP). It gives down payment and closing cost assistance to first-time homebuyers that are DC residents. It is a 0% interest loan that is deferred for 5 years after the date of the home purchase.

    There are income requirements, but it operates on a sliding scale. I made just over $50k when I bought and I qualified for $14k towards the down payment. Anyone who qualifies for the program also gets $4k in closing cost assistance.

    Between my own money that I put towards the down payment (about $8k), HPAP, and the tax abatement program, my mortgage payments on my 1-BR condo that I paid $195k for are about $980 a month. I would be paying much more than that if I were renting in the area.

    A word of warning to anyone who considers it, though: they do not make it easy. You are required to go orientation and training programs targeted at first-time homebuyers (they were actually pretty helpful). You have to do everything twice: underwriting, home inspection, etc. They will not authorize your loan if they think you are borrowing beyond your means–and they have stricter guidelines than Wells Fargo did for my primary mortgage. They lost a good deal of my paperwork and made me jump through more hoops than I care to remember, so patience and organization are key. But the bottom line is that without that program I would still be renting.

    Here’s the info:

  • For HARP, the home you re-fi does NOT have to be your principal residence. Whoever told you that is flat out wrong. We are using HARP to re-fi an investment property in another state. Just FYI.

    • Thanks for mentioning this – that you are refinancing an investment property. This is the page where it says “you may qualify” if the property you want to refinance is your principle residence

      Do you mind me asking if you got asked if this property is your primary residence? Our rental house is in my name and the home we live in is in my husband’s so the rental property is the only property in my name…I just don’t live there. I figured there was no point in trying to hide that as they ask for so much documentation (tax returns, etc) that it would become abundantly clear that I don’t live there anymore. Interested to hear how you did this. Thanks!!

      • Yep, told Chase flat out that it was an investment property, different state, etc. They said no problem. Of course, they may kick it back to us in a week or two, but they didn’t seem fazed at all. I made sure they knew.

        Also, with HARP, they told me that you don’t need to provide much documentation at all. No income verification, tax returns, etc. It’s not a new bank getting the loan, after all, it’s the same one just modifying your loan.

        Frankly, I’m not sure what’s in it for the banks. Maybe they get TARP funds or something…

        • I guess you could interpret the phrase “Own a one- to four-unit home that is your primary residence” to mean that, as long as you live in a house you own, you can use HARP to re-fi your other house(s), since they don’t specifically mention that the house you re-fi must also be your primary residence. I think. Maybe.

        • Wow, great! thanks for sharing. I’ll give it a shot.

  • i used this program earlier this year. You can go to the Freddie and Fanny sites and check to see if they own your mortgage, just grab your latest statement, and on it wsomewhere is a loan number you plug into the site.

    Also – i believe you have to have an adjustable rate mortgage or an interest only mortgage (mine happenned to be both on my first loan). My second loan was fixed rate and interest and principal, so it did not qualify – I only re-fi’d my first mortgage. Also, if you have a second mortgage, the hardest part is to get them to re-sign the paperwork that says they continue to be subservient to the first mortgage.

    At the end of the day I went from a 6% interest only ARM, to a 5% interest and principal, 30 year fixed on my first mortgage. It was worth the hassle.

    • No, we’re doing it on a 30-year fixed loan with a 6.375% rate (we’re getting it down to 5.something) so I believe any ol’ loan can qualify.

    • Nope, ours was a 30-year fixed loan, also at 6.375% and also went down to 5 something. I can’t remember why we didn’t roll in the second mortgage/HELOC, but there was a reason. Luckily both of ours were with Wells Fargo, as was the new 30-year fixed, so we didn’t have to deal with the suboordination thing.

Comments are closed.