Q: I want to refinance to a 20-year fixed mortgage. I owe more on my home than it is worth by about 20 percent. I want to compare quotes but no one will tell me anything unless I fill out an application. How is this going to affect my credit?
A: If you are "underwater"--that is, your mortgage balance is higher than the current value of your home--your refinance opportunities become severely limited. If your loan is owned by Fannie Mae or Freddie Mac, you should be eligible for the Home Affordable Refinance Program (HARP), which will allow you access to some fantastic mortgage rates in today's market despite how underwater you are. Your participation in HARP will depend upon your servicer's participation in the program.
The first step is to find out if your loan is eligible. You should check with your loan's servicer--their number should be on your monthly statement--or you can use a loan-look-up tool and check with the Fannie Mae and Freddie Mac databases to see. If your loan is eligible, you'll need to work with your servicer to get you through the refinance process. However, since HARP is voluntary, not all lenders participate. If your loan is eligible, but your servicer does not participate, you are then free to talk to other lenders about your refinance.
Until you know if you are in or out of the program, there's no reason to place applications anywhere. If you do find you will be shopping the open market, please know that the credit bureaus usually treat multiple applications for a mortgage submitted to different lenders as a single entry in your credit file, so there should be no undue effect on your credit rating.
- HSH.com’s annual outlook: 2019 Mortgage and Housing Market Forecasts
At the start of each year, HSH.com details the important factors we think are most likely to influence the mortgage and real estate markets in the coming year. Come each July, we review to see if our expectations are being met or not.
- What is a rate and term refinance?
Homeowners have a variety of reasons for refinancing and each reason can indicate that one refinance option or another makes the most sense.
- Are ten-year fixed-rate mortgages (FRM) available anywhere?
Sure! Virtually all lenders who sell product to Fannie Mae or Freddie Mac will be able to offer you mortgage with a 10-year term. However, interest rates are usually the same as the lender's 15-year offerings.
- What is HARP and do I qualify for a HARP loan?
Thousands of homeowners are still eligible to refinance under HARP. Are you one of them? Time is running out!
- How quickly can you refinance after a bankruptcy?
We have received a lot of questions over the years regarding how quickly you can refinance a mortgage following bankruptcy.