Is it Time for You to Refinance Your Mortgage Loan? With the Federal Reserve signaling its intent to reduce the stimulus package, interest rates have seen a gradual uptick over the last couple of weeks. Homeowners are rushing to take advantage of this last opportunity to refinance their homes while rates are still attractive and affordable. But what if you are one of the many homeowners who are currently underwater? Do you owe more than the home is currently worth? Going through a traditional refinance program usually requires an appraisal. If you owe more than the home's market value, you will not qualify. However, there is an alternative program that allows those with underwater mortgages to refinance.
HARP to the Rescue The Home Affordable Refinance Program, also referred to as HARP 2.0, doesn't require an appraisal, though there are some specific requirements to qualify. The home mortgage must be owned or backed by Fannie Mae or Freddie Mac. It must have been sold on or before May 31, 2009. The home owner must be current on the loan and have twelve months of good payment history. Also, the current loanvalue ratio must be over 80%. You can refinance in California under this program if you qualify.
Why refinance? Lowering the interest rate on your loan will decrease the total amount that has to be paid on the mortgage overtime. Refinancing to 15 years may allow a home owner to pay their loan off much sooner than it would have otherwise been possible. Alternatively, refinancing and resetting the loan to 30 years allows home owners to have affordable monthly payments. For some, refinancing can mean the difference between staying in their home and potentially losing it.
Charges and Cost of Refinancing There are a variety of charges you need to be aware of when refinancing your home. You must pay closing costs again, and often there are other fees that apply. To make it worthwhile, you should plan on staying in the home for at least five additional years. Five years is the average breakeven point when it comes to saving on interest versus paying closing costs. To decide if the time is right for you to refinance, call your mortgage lender and set up an appointment. They will be able to tell you if your loan qualifies for the home refinance program. You can also shop around and check out other lenders. The market is starting to look up in many areas. However, for those who bought homes right before the market crashed, it still may not be enough to qualify for a traditional refinance program. If you are paying more than 4.5% interest, itâ€™s time to call your lender.
Published on Jul 29, 2013
With the Federal Reserve signaling its intent to reduce the stimulus package, interest rates have seen a gradual uptick over the last couple...