The new program is intended to revive the government’s Home Affordable Refinance Program (HARP) program. The HARP program was intended to help spur re-financing for many homeowners so they could take advantage of the historically low interest rates and potentially save hundreds of dollars a month.
The HARP program, however, has not worked as it was initially intended. Many stumbling blocks have prevented the program in reaching many homeowners in some of the hardest hit regions of the country. One of the biggest involved the requirement surrounding home equity.
But the new changes to HARP should hopefully change that and make it easier for millions to re-finance their mortgages.
For instance, to become eligible for the new HARP, a homeowner must have a mortgage sold to Fannie Mae or Freddie Mac on or before May 31, 2009. The homeowner must also be current in their payments and without any late payments in the past six months. Additionally, some fees were also eliminated on loans that run 20 years or less and lowered on longer term mortgages. In some cases, the homeowner will also no longer need a new appraisal on the home, which should reduce the refinance costs.
Additionally, and of significance, there is no limit on how deeply underwater someone can be as long as they re-finance into a 30 year fixed mortgage.
The new changes should not only benefit many homeowners, but should also help financial institutions become fewer homeowners will eventually default.
But one of the biggest factors that will drive the success of this new program will be interest rates. Today interest rates are hovering at historically low levels. For instance, the average rate for a 30 year mortgage today is 4.2%. If interest rates rise, however, this program may not be as attractive to many.
Navigating these waters can be difficult, but we are experienced in handling real estate matters. Many alternatives exist to struggling homeowners. At Alvarez & Barbara, LLP, we are prepared to help you with your real estate needs. Contact us today.
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