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New refinancing opportunity for underwater borrowers

[Nov 9, 2011.]


If you are one of the many homeowners who has watched mortgage interest rates plummet but have been unable to refinance, changes to the HARP program may be your ticket to take advantage of today's mortgage rates. While in some areas housing values are beginning to rise, approximately one in four homeowners still owe more on their mortgage than their home is worth.

HARP changes

While instructions to lenders about the HARP program will be given in mid November, applications for a HARP refinance may not be available until December 1st or later. The program is scheduled to end December 31, 2013.

The biggest change in the HARP program is that there are no longer any limits as to how far underwater borrowers must be. In the previous rules of the program, homeowners could only refinance up to 125 percent of their home's value. Now you can refinance an even higher loan-to-value amount. In addition, you will not have to get an appraisal as part of the refinancing process.

Some fees for refinancing will be reduced or eliminated for borrowers who choose to refinance into a shorter-term home loan.

To be eligible for the HARP program you will need to meet the following criteria:

  • Your current mortgage must have been sold to Fannie Mae or Freddie Mac prior to June 1, 2009.

  • You must be current on your mortgage payments with no late payment in the past six months and no more than one late payment in the past 12 months.

You can contact your lender to find out if you are eligible or go to Fannie Mae or Freddie Mac to find out if your loan qualifies for the HARP program.

Refinancing considerations

If you are trying to decide if a refinance is good for you, look beyond today's mortgage rates at your overall financial picture. While refinancing into a shorter loan could help you eliminate your mortgage faster, you should be prepared to make higher monthly payments. You can use a mortgage calculator to compare your payments and overall interest with various mortgage refinance scenarios. Don't forget to calculate the costs of a refinance, which are not eliminated by the HARP program.

If you want to find out about options for refinancing in your area, go here.


About Author:

Michele Lerner is a freelance writer with twenty years of experience writing articles and web content for newspapers and magazines on topics related to real estate, personal finance, and business.

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