What is meant by “improving long-term affordability or stability”?
A refinance under HARP must either reduce the borrower’s monthly payments or put the borrower into a more stable loan product. 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 the borrower’s payment in the short term, but would improve the borrower’s ability to sustain mortgage payments over the long term. Counselors should review the Good Faith Estimate provided by the servicer or new lender to help the borrower determine if a refinance under HARP will put the borrower in a more secure financial position.
