Will a revised HARP program really work for us here in Las Vegas? Will it work Nationwide in CA, FL, AZ, etc...
Lets look at the numbers (basic scenario)...
Lets say an average house right now has a mortgage balance of $200k, and their rate is 5.875%. Thus their principle and interest payment is $1183.08. If you refinance to today's conventional rates at 4.875% (today's rate is about 4.25% but their will be rate adjusters because of the LTV) the principle and interest becomes $1058.42.
This saves the average homeowner $124.66 a month or $1495.92 a year.
Is $1495.92 savings a year enough to save someone from foreclosing or short selling on a house they know is worth half of what they owe?
Yes, it is great that a refinance program will be available for those who are greater than 25% upside down on their house (current HARP program), but will this really solve the problem?
Another Band Aid and great political tool to use for re-election time?
Don't forget, when we refinance a customer, it sets them back to a 30 year term and all the interest is being paid in the first 10 years of the loan.
Secretary Donovan's comments of saving the average homeowner $2400 a year seem a bit off.
A Revised HARP program for the nation sounds good, but still not the answer for Las Vegas and other severly hit housing markets.