It’s March and the new guidelines will kick in making this a great time to refinance. You may be eligible if you currently have a Fannie Mae or Freddie Mac loan and meet the following requirements:
· Mortgage closed before May 31, 2009
· Loan to Value (LTV) is greater than 80%
· You have not missed a payment in the previous 6 months
· You have no more than 1 late payment in the past 12 months
· You have not refinanced under the original HARP program (unless Fannie Mae owned the refinance HARP loan originated between March and May 2009)
Why consider HARP 2?
· Low current interest rates
· Unlimited Loan to Value (LTV)
· Lower monthly mortgage payment (see paragraph below)
By refinancing to a 30 year loan you are essentially starting over again. This means more interest paid over the life of the loan. In light of this, some might elect to go with a 15 year loan. But, there’s another option.
A typical scenario might look like this:
$100,000 loan for 30 years @3.75% = $463.12 Principal and Interest
$100,000 loan for 15 years @3.25% = $702.67 Principal and Interest
In my opinion the 30 year loan is safer. Remember, you can always pay down the principal faster by paying extra on the balance. If you elect the higher payment on the 15 year loan it is not possible to pay less.
If you feel you need a little more detail, I will be happy to crunch the numbers for you. Call me at (615) 895-4265 or leave a comment below.