Home Affordable Refinance Program (HARP) can Help Homeowners with Falling Home Values

The severe drop in home values in the US over the past several years has caused quite a dilemma for many people wishing to refinance into the current historic low refinance rates. The homeowner may have perhaps taken out a 30 Year Fixed Rate, 80 percent LTV conventional mortgage in 2006 at 6.0%, with no PMI. Now, the borrower would like to refinance into a 4.5% 30 Year Fixed Rate or a 4.25% 15 Year Fixed Rate with no points. Yes, an outstanding benefit scenario, if it weren’t for the drop in home value.

For example, the homeowner’s current mortgage has a balance of $230,000 and the home appraised for $300,000 in 2006. The home value has dropped to $245,000 currently, which would result in a refinance LTV scenario of 94 percent ($230,000 divided by $245,000). You can still get the 4.5% rate, but you now have PMI added to your loan, which results in a no-benefit scenario.

Now, assume the home value dropped to $230,000 or lower. That would result in no conventional refinance option.

These types of refinancing scenarios have affected thousands of homeowners trying to refinance into today’s low refinance mortgage rates. Home prices have fallen hard in many national regions since 2007, pinning homeowners against the proverbial refinancing wall.

Well, here is where the Home Affordable Refinance Program (HARP) comes into the picture. For those qualified, it can turn a no-benefit or non-qualifying regular refinance scenario into a blockbuster savings bonanza for the borrower.

The Harp program will allow for refinancing up to a 125% LTV and also exclude PMI if the homeowner does not currently have PMI with their mortgage. You still get the great current rates, and Eligible loans receive increased underwriting flexibilities, including expanded eligibility criteria and minimum documentation requirements.

So, in the preceding example, the homeowner would be able to refinance into that 4.5% 30-Year Fixed Rate with no points, no PMI, and reduced eligibility criteria.

Just think about it, you can be technically underwater on your mortgage by up to 25% of your principle balance and still be eligible for the best refinancing deals on the market!

It sounds too good to be true, so what’s the catch?

There are no catches, except that the program is available for refinances of existing Fannie Mae loans only.

If you think you might benefit by utilizing the HARP program, just give us a call at (888) 850-9888 and we’ll check to see if you are eligible.

On the refinance mortgage rates front, rates continue to huddle at historic low levels. In fact, the hint that the Fed will begin another round of quantitative easing sooner rather than later caused the bond market to rally yesterday afternoon, dropping the 10-year Treasury yield. As a result, refinance mortgage rates are in an awesome position for homeowners at present.

If you are considering a home mortgage refinance now and need some help, have questions, or need some competitive refinance rate quotes, please check out the popular Refinance Tool Box. Just give a call at 888-850-9888 or fill out a Rate Quote Request online for professional assistance without the aggressive high-pressure sales tactics.

May the Mortgage Refinance Rates be with You!

Refinance Tool Box