Home Affordable Refinance Program (HARP)

The Home Affordable Refinance Program (HARP) was introduced in 2009 to allow certain homeowners to refinance their mortgage loans. Loan servicers typically will not permit refinancing where a homeowner has less than 80% equity in his or her home, which has become more and more common as home values have declined in the current recession. Under HARP program, however, even homeowners who have less equity may be able to refinance into fixed rate mortgage loans that take advantage of the historically low interest rates. 

Under HARP, creditworthy borrowers who have shown a commitment to paying their mortgage have the opportunity to refinance their mortgage so that the payments are affordable and sustainable for the life of the loan.

Will refinancing lower my payments?

Refinancing your home often will lower your monthly payments.  However, whether your payments are reduced may depend upon how your home is refinanced and whether your loan is modified or not.  

Borrowers whose mortgage interest rates are much higher than the current market rate may pursue an immediate reduction in their payments.  However, borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see a reduction in their payment if they refinance to a fixed rate and payment. These borrowers, however, could save a great deal over the life of the loan by avoiding future mortgage payment increases.

When you submit a loan application, your lender will give you a “Good Faith Estimate” that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you.

How do I apply to refinance my mortgage under the Home Affordable Refinance Program?

You should call your mortgage servicer or lender and ask about the Home Affordable Refinance application process. The number is on your monthly mortgage bill or coupon book.  It may take some time to speak to someone at your bank about refinancing under this option.  This is because the program is fairly new, so lenders and servicers are just beginning to implement the program and it may take time before they are ready to process all applications. In the meantime, it will help your lender and speed up the application process if you gather some information and documents before you call.

You should speak to an attorney regarding your refinancing options as well.  You may qualify for a variety of programs and an attorney will be able to explain which program is best for your situation.  Also, when you are represented by an attorney, the attorney may be able to speed up the process of getting your refinance approved by your lender. 

Does HARP refinancing reduce the amount that I owe on my loan?

Refinancing your mortgage under the Home Affordable Refinance Program will not reduce the amount you owe on the mortgage. The objective of the Home Affordable Refinance is to help borrowers get into more affordable loans. Refinancing will not reduce the principal amount you owe to the first mortgage holder or any other debt you owe. However, refinancing should save you money by reducing the amount of interest that you pay over the life of the loan.

If you refinance your loan in connection with a loan modification, however, you may be able to obtain a principal reduction on your mortgage. 

If I’m current on my mortgage will the Home Affordable Refinance Program help me?

If you are current on your mortgage, you may be able to refinance your loan under the Home Affordable Refinance Program.  Many homeowners who are current on their mortgages have been unable to refinance their mortgages and take advantage of today’s lower interest rates because their homes have decreased in value.  These eligible borrowers may now have the opportunity to refinance. Through the Home Affordable Refinance Program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they own or that they placed in mortgage backed securities.

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