Eligible borrowers 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.

You may be eligible if:

• The loan on your property is owned or guaranteed by Fannie Mae or Freddie Mac (Don't know? See below);
• At the time you apply, you are current on your mortgage payments ("current" generally means that you have not been more than 30 days late on your mortgage payment in the last 12 months, or, if you have had the loan for less than 12 months, you have never missed a payment);
• The amount you owe on your first lien mortgage does not exceed 125 percent of the current market value of your property;
• You have a reasonable ability to pay the new mortgage payments; and
• The refinance improves the long term affordability or stability of your loan.

Your lender will give you a "Good Faith Estimate" and a Truth in Lending Statement; between the two disclosures you will see your new interest rate, mortgage payment and the amount you will pay over the life of the loan. Compare this to your current loan terms. If the proposed new payment is not an improvement, refinancing may not be right for you. But consider that refinancing from an adjustable rate loan (an ARM) to a fixed rate loan or eliminating higher risk loan terms such as interest only payments or balloon payments may also provide long term stability. For example, refinancing from an ARM with a low introductory teaser rate or from an interest-only mortgage into a fixed-rate loan product may actually increase your payment in the short term, but would improve your ability to sustain mortgage payments over the long-term.

You should call your mortgage lender or servicer (the organization to whom you make your monthly mortgage payments) and ask about the program.

Both Fannie Mae and Freddie Mac have established toll-free telephone numbers and web submission processes to make this data available.  Borrowers 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.  

• For Fannie Mae
  • 1-800-7FANNIE (8am to 8pm EST).
  • www.fanniemae.com/loanlookup

• Freddie Mac 
  • -800-FREDDIE (8am to 8pm EST)
  • www.freddiemac.com/mymortgage

Eligible loans will include those where the first lien mortgage does not exceed 125 percent of the current market value of the property. For example, if your property is worth $200,000 but you owe $250,000 or less on your first lien mortgage you may qualify. The current market value of your property will be determined after you apply to refinance.

As long as the amount due on the first lien mortgage is less than 125 percent of the value of the property, borrowers with more than one mortgage may be eligible for a refinance under HARP. Your eligibility will depend, in part, on two additional requirements: first, that the lender that has your junior lien mortgage must agree to remain in a junior lien position, and second, on your ability to meet the new payment terms on the first lien mortgage.

The objective of a refinance under HARP is to provide creditworthy borrowers who have shown a commitment to paying their mortgage, the opportunity to get into a new mortgage with payments that are affordable today and sustainable for the life of the loan. Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments.

Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down 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" and a "Truth in Lending Statement" 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.

The rate will be based on market rates in effect at the time of the refinance and 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.

No. The objective of a refinance under HARP is to help borrowers get into more affordable or stable loans. Refinancing will not reduce the principal amount you owe to the first lien 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.

No. However, borrowers whose loans are owned or guaranteed by Fannie Mae may be eligible to finance all closing costs and obtain a small amount of cash (up to $250) through the refinance if there is sufficient equity. Borrowers whose loans are owned or guaranteed by Freddie Mac may be eligible to finance transaction costs equal to the lesser of 4 percent of the current unpaid principal balance of the loan being refinanced or $5,000. In addition, such borrowers may obtain up to $250 cash.

You should call your mortgage lender and ask for a Home Affordable Refinance application. The number is on your monthly mortgage bill or coupon book. Please be patient. Lenders and servicers are implementing the program now 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.

Alternately, you may apply through a lender approved to do business with Fannie Mae or Freddie Mac. Nearly all major banks and mortgage brokers have this approval.

It will help your lender if you gather some information and documents before you call. Generally, you will need:

• Information about the monthly gross (before tax) income of all the borrowers on your loan, including recent pay stubs if you receive them, or documentation of income you receive from other sources.
• Your most recent income tax return.
• Information about any junior lien mortgage on the house.
• Account balances and minimum monthly payments due on all of your credit cards.
• Account balances and monthly payments on all your other debts such as student loans and car loans.
  
  

No. Borrowers who are currently delinquent or have been 30 days overdue more than once during the past 12 months generally will not qualify. You should contact your servicer to see if a modification under the Home Affordable Modification Program is an option for you.

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.

The program expires on June 10, 2010. Your refinance under HARP must have a mortgage note date on or before that date.