Imagine the average home owner in your neighborhood having an extra $300 in their pocket every month after a successful refinance? What do you think that new found cash flow might mean to your local economy? Would they stay in their home and invest in necessities and just maybe have something left over at the end of the month? Might they start going to dinners out and movies again? Might they look around at the amazing low real estate bargains and consider re-investing at the bottom?
Well that is precisely what HARP 2.0 offers*. President Obama's recent promise of 'lower interest rates for American Homeowners' sent a flood of people into lenders' doors. For many this is happy news indeed!
To date, for many homeowners, the ability to refinance their mortgages into a lower rate of the day has been met with frustrating knowledge they no longer have the equity to do so. Home Affordable Refinance Program (HARP) 2.0. will assist many people. Home owners who have been patient and stayed the course are being offered better rates on their mortgages to stay put and support their communities. Consider it a reward for good behavior.
On February 15, the revised guidelines for this program were announced to allow home owners with either a Fannie Mae or Freddie Mac loan to refinance their home even if they are 'underwater'.
An underwater example is a home mortgage of $125,000 on a home is appraised today at $100,000 value. Normally the reverse is true: that you can get a loan when you have 20% or more positive equity. But with HARP 2.0 your equity can be negative and you still get a great rate. Call to find out if your home mortgage is eligible for this program. HARP was extended until December 2013.
The guidelines are very specific: your occupancy status cannot change, owners on title cannot change, your income must be stable/qualified and you must not be late more than 1 payment in a 12 month period. For those who do qualify it's a very cool program. Expect more extensions as time goes on to include non GSE sponsored loans (my hope).
One 105% LTV condo owner I know who was technically 'not eligible' saved $300 per month for the price of an appraisal, some extra paperwork and patience. Another gentleman closed inside 30 days on his 95% LTV home and has been able to loosen his belt a bit. Neither party is paying mortgage insurance. They both lowered their interest rates over 1.5% and in one case got out of an ARM. What's not to love?
HINT: Not all banks have sufficient relationships with Fannie Mae and Freddie Mac to offer these programs. Your tax dollars at work. Pass the word!
*This program is not for distressed borrowers who have missed payments or are facing foreclosure.