Q: Who is my "servicer"? Is my servicer the same as my lender or investor?
Your loan servicer is the financial institution that collects your monthly mortgage payments and has responsibility for the management and accounting of your loan. It is possible that the owner of your mortgage also services it, however many loans are owned by groups of investors and these investors hire loan servicers to interact with homeowners on their behalf. Many lenders also have the loan servicers handle all contact with homeowners.
For example, your servicer could be "Bank A" but the investor in your loan could be Fannie Mae, Freddie Mac or a group of investors.
Q: How do I know if I'm eligible for The H.A.R.P. Program?
You may be eligible if:
The mortgage MUST be owned or guaranteed by Fannie Mae or Freddie Mac
The mortgage MUST have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
The mortgage CANNOT have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
The current loan-to-value (LTV) ratio MUST be greater than 80%
The borrower MUST be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months.
You have a reasonable ability to pay the new mortgage payments.
The refinance improves the long term affordability or stability of your loan.
Q: How do I know if my loan is owned by Fannie Mae or Freddie Mac?
Both Fannie Mae and Freddie Mac have established toll-free telephone numbers and web submission processes to make this data available. Homeowners can enter information to determine if either agency owns or guaranteed the loan. This information is not a guarantee of eligibility for a refinance under HARP, as other qualifying criteria must also be met.
Q: What are the interest rates and other terms of a refinance under HARP?
The rate will be based on market rates in effect at the time of the refinance and the homeowner will be subject to any associated points and fees quoted by your lender. Interest rates may vary across lenders and over time as market rates adjust. The refinanced loans must have no prepayment penalties or balloon payments.
Q: I have both a first lien and a second lien mortgage. Do I still qualify?
Yes, there is no longer a maximum LTV limit for borrower eligibility. Homeowners with more than one mortgage may be eligible for a refinance under HARP. Your eligibility will depend, in part, on two additional requirements:
The lender that has your junior lien mortgage must agree to remain in a junior lien position. You must be able to demonstrate your ability to meet the new payment terms on the first lien mortgage.
Q: If I am delinquent on my mortgage will I still qualify?
No. Homeowners who are currently delinquent or have been more than 30 days overdue during the past 12 months generally will not qualify. Contact your servicer to see if a modification under the Home Affordable Modification Program is an option for you.
Q: Why encourage borrowers to shorten the terms of their mortgage?
Borrowers who owe more on their mortgages than their homes are worth may be locked into their homes for years and have fewer financial options until they pay down the loan balance. A shorter term mortgage enables such borrowers to pay down the amount they owe much faster than a traditional 30-year mortgage. Furthermore, interest rates on shorter term mortgages usually are less than on thirty-year mortgages. The lower interest rate may provide borrowers the opportunity to shorten the term of their mortgages without much change in their monthly payments, and perhaps even a reduction in that payment. Such an outcome may strengthen the borrower’s financial condition and lower the credit risk for the servicer/lender that owns or guarantees the loan. A few examples illustrate how this works:
Assume a homeowner currently has a mortgage on which he or she owes $200,000 and has an interest rate of 6.5 percent – a monthly payment of $1264. If the house is worth $160,000, the homeowner has a current loan-to-value (LTV) ratio of 125 percent.
If this borrower refinanced into a 30-year fixed-rate mortgage with an interest rate of 4.5 percent, the monthly payment would decline to $1013. But, by refinancing into a 30-year loan, the borrower’s loan balance will not reach $160,000 for ten full years.
If the borrower chose a 20-year loan term at a rate of 4.25 percent (mortgage rates tend to be less for shorter term mortgages), the monthly payment would be $1238 ($26 less than the borrower currently pays) and the borrower’s loan balance would reach $160,000 in five-and-one-half years.
If this same borrower refinanced into a 15 year mortgage, assuming an interest rate of 3.75 percent, the monthly payment would be $1454 ($190 more than the current payment), but the loan balance would be below $160,000 in a bit more than three-and-one-half years.
Q: How long will refinances under HARP be available?
The program expires on September 30th, 2017. Your refinance under HARP must have a mortgage note date on or before that date.
Q: Will I need mortgage insurance?
If your existing loan has private mortgage insurance, you will need the same amount of insurance coverage for a refinance under HARP. If your existing loan does not have private mortgage insurance, it will not be required as part of a refinance under HARP.
Q: I'm current on my mortgage. Will a refinance under (HARP) help me?
Eligible homeowners who are current on their mortgages but have been unable to take advantage of today's lower interest rates because their homes have decreased in value, may now have the opportunity to refinance. Through a refinance under HARP, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they own or that they guaranteed in mortgage backed securities.