Over time of financial loss and general lack of positive solutions, the government enacted various home buying incentives to stimulate the market and short sales became a growing trend to prevent foreclosure, however no programs seemed to surface for the mortgage paying home owner that continued to face increasing property taxes on their reducing home values while battling the cost of daily expenses.
If you are current on your mortgage HARP (Home Affordable Refinance Program) may be a viable money saving solution.
Why can HARP help?
- If you made your mortgage payments on time over the past 12 months, and subject to additional qualifications (see qualifications) HARP gives you the ability to refinance in some cases without an appraisal, or allows for a much higher loan to value appraisal (80%+) for your first mortgage. Meaning, your house being upside down might not prevent you from refinancing.
- This is a refinance of your first mortgage only, so if you bought at 5% down, and did one of the popular 80/20 or 80/15/5 loans, the 20% isn’t counted in the percentage.
- It may allow you to reduce your interest rate (current rates are 4% +/-) if you qualify.
- It may allow you to change the term of your loan. If you owned the house for 5 years, you may want to do a 25 year loan, but going to 27 or back to 30 years will also reduce your payments.
- If you filed for bankruptcy and didn’t include the home, you may be able to still qualify. Most guidelines require minimum of 4 years after discharge, but HARP might not.
- It is a refinance, and although there may be an appraisal fee + application ($400-$500), depending on your credit and qualifications, you may be able to lock in a lower fixed rate, reduce your mortgage payments and take a small breather. The closing costs should be rolled into the loan, so no additional expense at closing.
How to obtain it?
- Call your mortgage company that holds the main loan, or call your trusted mortgage professional, however it seems that by you being a long term customer of your mortgage company, it may hold some weight.
- Have your Realtor pull a CMA (Comparative Market Analysis) to determine the approximate value of your home, before you pay for the appraisal. You need to ensure this goes through before spending money on the application fee.
- Once you do connect with the lender, get everything in writing, and don’t hesitate to communicate via email, to maintain proper records.
- Once you determine that this is a feasible option, don’t fall asleep at returning the documents. You often get 10 business days to fill out the forms and mail or fax back.
I had a recent client that had a rate of 6.25%, bought a home for over $400,000, and could not refinance due to the value being around $320,000. With HARP she dropped to 4.6%, extended the loan to 29 years and reduced mortgage payments by $430/month. That is MONEY!
(I am not a mortgage lender, but spend a lot of time around families in distress. Please consult your Realtor, Mortgage Lender, HARP or Mortgage Company for specific information, as each and every program is specific to only you.)