How Can I Refinance My Fannie Mae or Freddie Mac Mortgage?
If your home value has fallen while your mortgage payments have increased, and Fannie Mae or Freddie Mac owns or guarantees your mortgage, the government’s Making Home Affordable program may have a refinance option for you. It’s called the Home Affordable Refinance Program (HARP).
Refinancing can help a homeowner by initiating a new mortgage loan with better terms to pay off and replace the current loan. HARP Refinancing is only available to financially stable borrowers who already have a Fannie Mae or a Freddie Mac mortgage and have been keeping it current for at least the past 12 months. In addition, the balance on your first mortgage must be under 125 percent of your home’s current value. If you meet these criteria, ask your lender if you could qualify for HARP.
HARP loans can reduce a borrower’s mortgage interest expenses in one of two ways. If you have an adjustable-rate mortgage or subprime lending terms such as balloon payments and interest-only payments, getting into a fixed-rate mortgage can give your debt more stability. It may raise your mortgage payment, but more of that payment will be applied to the principal on the loan so your debt will be paid down faster. The other benefit of a HARP loan goes to people who got stuck with a high interest rate when they bought their home. Refinancing at current rates can automatically make those mortgage payments more affordable.
There is no opportunity to add other debts to the amount financed in a HARP loan. Some closing costs may be financed, however, and could result in cash back of up to $250. Refinancing under HARP does not change your current obligation to carry private mortgage insurance.
Qualifying properties include primary residences, secondary residences, and multi-family properties with four or less units. Both owner-occupied and investment properties may be considered for HARP refinancing.
The program’s current expiration date is December 2012, so any refinancing must be completed on or before that date.
For more information on how HARP can help you, visit the Making Home Affordable website. If you have gotten behind on your mortgage payments and don’t qualify for HARP, see if you might be eligible for a loan modification under the Home Affordable Modification Program (HAMP) instead.