Home Affordable Refinance Program

• If you need help with an interest-only mortgage, you can contact the Home Affordable Refinance Program or HARP. This is a program that was created by the federal government in response to the problems in the housing industry in 2008. The purpose of this program is to help homeowners facilitate a refinance for their existing mortgage. With this program, you could potentially qualify for help even if you are upside down on your current mortgage.
  
  

Eligibility

• Not everyone is eligible to take advantage of the Home Affordable Refinance Program. To qualify for this program, you have to be current on your existing mortgage. You also have to be living in the property that you wished refinance and it has to be a one to four unit structure. The loan on your home cannot exceed more than 125 percent of the market value of your house. You also have to be able to show that you have the ability to make future payments.
  
  

How it Helps

• When you are paying an interest-only mortgage, you will eventually have to make a balloon payment or start making bigger payments to pay off your loan. If you are using this kind of mortgage and you owe more than your house is worth, you may be unable to refinance with a traditional program. By using this program, you can get into a fixed rate mortgage and lower the total amount of interest that you pay over the life of your loan.
  
  

Payment Changes

• If you have an interest-only mortgage, this program may not actually lower your monthly payments. When you have an interest-only mortgage, the amount of money that you pay each month is based on the interest that is accruing. If you refinance into a traditional fixed-rate loan, you would have to pay interest and principal every month. This could actually raise your payment in some cases. The big savings come in the form of interest rate reductions over the life of the loan.