A home loan refinancing occurs when someone with an existing mortgages gets a new mortgage to replace it. Funds from the new mortgage are used to pay off the old mortgage.

A number of circumstances could lead to a decision to refinance, such as:

• The existing mortgage has a higher interest rate than a new mortgage.

• The value of the mortgaged property has increased in value and the borrower wants to use some of the new equity for other purposes. So, he gets a larger mortgage than the one he now has and takes cash out.

• The existing mortgage is “under water” and the borrower wants to correct it with a HARP refinance. (link this to the harp article).

• The existing mortgage has only a few years left. The borrower wants to use the equity he has in his home for other things or he wants to reduce his monthly payment. So, he gets a new mortgage with a lower monthly payment or takes cash out.

What Is A HARP Refinance?

If you are “under water” with your current mortgage (meaning that your mortgage balance is greater than the value of the property), then you may qualify for a HARP Refinance. There are a few conditions that must be met. So, you will want to work with a lender who can manage these with you. But note that a HARP refinance will not reduce the amount you owe; it will just make servicing the loan more affordable. That is, it will lower your monthly payments.

Is A HARP Refinance Right For You?

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