It’s all over headlines, Americans are underwater on their homes, i.e. they owe more on their mortgage than their home is worth. According to CNN Money, more than 30% of mortgage borrowers are in this boat. How did this happen? Unfortunately when the real estate market collapsed and home values declined, many folks found that the home they bought for $300,000, was now only worth half. They also found that, because they were underwater, they didn’t qualify to refinance to get a lower rate and a lower monthly payment.
The goal of this blog is not to be a downer, but to explain a program that the government is encouraging mortgage lenders to participate in to help people in this tough position. If you have yet to learn about the Home Affordable Refinance Program, please read on. If you already know about it, it’s time to take action and speak to a HARP professional.
Home Affordable Refinance Program (HARP)
The government established HARP, termed the foreclosure-prevention program, to specifically help homeowners that are current on their mortgage payments, have made no more than one late payment in the past 12 months, but have been unable to get traditional refinancing because of the decline in the value of their home. To qualify, the mortgage must have been sold to Fannie Mae or Freddie Mac prior to June 1, 2009.
It’s newly nicknamed HARP 2.0, because the program was revamped so that LTV is no longer capped, meaning it doesn’t matter how underwater you are on your home mortgage. However, many mortgage lenders have created their own caps, so be sure to ask about this when speaking to a professional.
The whole purpose of the program is to offer homeowners financial relief by allowing them to get a lower rate, and therefore a lower mortgage payment. How have the results been so far?
“More than 78,000 home loans were refinanced using the expanded Home Affordable Refinance Program during the first five months of 2012, more than for all of 2011,” the Federal Housing Finance Agency said. And, this past May marked the highest number of refinances in the history of the program with HARP 2.0 refinancing’s making up an impressive 20 percent of total refinances.
And just an FYI, according to the Federal Housing Finance Agency, “the U.S. Senate is considering a bill to further expand HARP, which is aimed at reaching as many as 17.5 million more borrowers.”
What are you waiting for?
Just because the value of your home has decreased doesn’t mean you’re stuck. Through HARP 2.0 you may be able to get a new, more affordable mortgage no matter how underwater you are. It’s worth a call.
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