Refinancing Archives - Page 2 of 2

What is the Home Affordable Refinance Program (HARP)?

Announced in the beginning of 2009, HARP is a federal government program created to help 5 million underwater or near-underwater homeowners refinance into a fixed rate loan with a lower monthly payment. However, as of Aug. 31, 2011, only 894,000 borrowers have actually refinanced through HARP.

In October 2011, President Obama announced a makeover to the HARP program with the purpose of reaching more underwater homeowners. The expanded HARP program – also referred to as HARP 2.0 – took effect on March 17, 2012 for eligible borrowers.

How do I find out who holds my mortgage?

There are two eligibility requirements for the HARP program:

1. Your mortgage must be held by either Fannie Mae or Freddie Mac. To “look up” your mortgage, check Fannie Mae. If you can’t find your mortgage there, check Freddie Mac. Your loan must be owned by one of these two choices to be eligible for HARP 2.0.

2. Your loan must have been funded by May 31, 2009.

Naturally, if you’re paying 6% for your mortgage and you can refinance at 5%, you’re gonna do it. Although cutting your monthly payment remains an important motive, there are at least five other reasons to consider a mortgage refinance, for long-term savings and convenience.

1. Change your mortgage term

If you decrease the term of your mortgage in a refinance by going from a 30-year to a 15-year, you’ll pay a lower interest rate and shorten your total interest costs. You’ll build home equity more quickly, and pay off your loan sooner, even though your monthly payments go up.

2. Move from an adjustable rate to a fixed rate

ARMs offer low introductory rates, but they also offer long periods of uncertainty that make it hard to budget. It makes sense in a mortgage refinance to go from an ARM to a fixed-rate loan during a low-interest rate environment. You’ll get emotional security and your rate won’t fluctuate with changing economic conditions.

3. Take out cash

With a cash-out mortgage refinance, you can turn an intangible asset—accumulated home equity—into a tangible one—cash. It makes sense for a project that will generate long-term benefits, like a home improvement or funding a child’s college education. However, don’t do it for frivolous reasons. Unless you’re extremely disciplined, you could find yourself in even deeper debt.

4. Consolidate two mortgages

When interest rates are low, a mortgage refinance lets you consolidate your main mortgage and an outstanding home equity loan to realize a lower overall monthly payment. Plus, you’ll have only one mortgage payment to make each month.

5. Recover from divorce

If your home is jointly owned with your soon-to-be ex-spouse, a mortgage refinance will turn a joint obligation into the responsibility of the person keeping the home. Nothing is more frustrating than tracking down a former spouse who doesn’t keep up with his or her end of the mortgage payment.

Lay the groundwork

If one of these reasons resonates with you, contact us to see how refinancing could benefit you.

Category: Refinancing

HARP 2.0 Has Arrived