Under the new HARP, now eligible homeowners who are “underwater” or owe more than 125% of their home’s value can take advantage of today’s low interest rates to reduce their payments. Homeowners who are considering a HARP refinance should first find out if their mortgage is owned by Freddie Mac or Fannie Mae. These are the only types of mortgages that can be refinanced under HARP.
What does refinancing mean?
When you refinance your mortgage, you get a new loan. This loan has all new terms, interest rates and monthly payments, and entirely replaces your current mortgage. If the value of your home has decreased or you owe more than your home is worth, you may be able to refinance your loan as part of the government’s Home Affordable Refinance Program (HARP).
Am I eligible for a loan refinance?
Refinancing can help you improve your financial situation if:
- You are not behind on your mortgage payments and have not been late in the previous 6 months
- You currently have a high interest rate or an adjustable rate mortgage
- You have equity in your home*
*If you don’t have equity in your home, you may still be eligible for HARP.
Underwater refinancing example case study
What are the possible benefits and drawbacks to refinance?
Benefits
- You may avoid foreclosure and be able to save your home
- Your payment may be more affordable through lowering your interest rate or changing other terms of your loan
- There is no negative activity on your credit report
Drawbacks
- You MUST be current on your payments to be eligible
- You are not guaranteed approval as you must meet qualifications and guidelines
I’m interested in a loan refinance, What do I need to do?
To get started, follow these simple steps:
- Gather all of your financial documents including your mortgage information, tax returns, and information on other debts.
- Contact a Homeowner Counselor at our Homeowner Resource Center by calling 727-773-5137 from 9am-9pm ET to discuss your situation and get advice on how to proceed with your bank or mortgage company.