The Home Affordable Refinance Program (HARP) was designed
to help homeowners with a Fannie Mae or Freddie Mac based loan refinance into a
lower mortgage rate and payment, regardless of their current equity
position. After the recent real estate
meltdown, many homeowners were left with less and in some cases no equity in
their home, even though they may have put down 20% when they bought their
home. When you don’t have 20% equity,
mortgage companies require Private Mortgage Insurance (PMI). Well, if you put down 20% and the value of
your home went down, traditional financing would require you to incur PMI on
any new mortgage you obtained. That meant
that if you were trying to refinance to a lower rate, but didn’t have 20%
equity anymore, your savings was negated by the need for PMI.
HARP was designed to take that obstacle out of the way
and it’s working. Recently, I uploaded a
borrower’s application to refinance where they were “underwater” (Wall Street’s
term for owing more than your home’s current value). When I loaded in an estimated value of
$300,000, the program told me that Fannie Mae’s data felt that the home value
was more in line with a value of $256,000, but they were going to use my figure
and the borrower could waive the appraisal.
These borrowers are going to not only save $330 a month, they are going
to save $450 on an appraisal fee. The
system works!
How can you tell if your mortgage is backed by Fannie Mae
or Freddie Mac? Here are a couple of
sites where you can check.
You can get all the info on qualifications and guidelines
at the Making
Home Affordable website program page, contact your current mortgage
provider, or me.
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