Helping Underwater Homeowners: New Housing Market Focus
Many homeowners in today's housing market are underwater in their mortgages and haven't had anywhere to turn for relief. That's about to change. New financial calculators will give lenders like AmeriFirst Home Mortgage the chance to help homeowners who owe more than their homes are worth refinance into lower interest rates. Lower rates will mean monthly savings and a little breathing room for a lot of homeowners. After all, people buying homes now are getting historically low interest rates, while you're in a house that's losing value while the interest rates fall around you. But since your value fell, you can't refinance. That just doesn't seem fair. Enter the Home Affordable Refinance Program part two, or "HARP 2.0" as it's called.
We've talked about this help for homeowners before. In HARP Round 2 and You we talked about lifting the previous loan-to-value cap. This meant if you owed more than the value of your home, then you could start looking for refinancing for a lower interest rate.
For mortgages backed by Fannie Mae and Freddie Mac (the largest investors in the mortgage market) before May May 31, 2009 there will be no more cap on the LTV. It was 125% as the limit, but now people who's values have fallen below their loan amount can possibly get help refinancing. Many fees have also been eliminated, making it more affordable to refinance. HARP round 2 also eliminates the need for a property appraisal when there is a reliable "automated valuation model" estimate provided by Fannie Mae or Freddie Mac. Homeowners must also be paying their bills. You can't have any late house payments in the last 6 months, and only 1 in the last 12 months. So this program extension is clearly meant to help people who are trying to pay their bills, and are seeing their values fall.
For a long time lenders like AmeriFirst Home Mortgage weren't able to help very many homeowners because of the regulations on programs like HARP. This weekend that begins to change. New financial calculators from Fannie Mae and Freddie Mac open up the door for lenders to help more people.
The goal of this push is really two-fold. One: it's time to reward homeowners who have stuck in there through the tough market and paid their house payments even as values dropped. You've done the right thing, it's time to have a reward for that. Two: lower interest rates mean lower payments which leads to more money in your pocket. The more money Americans have, the more we spend. The more we spend, the more robust our economy becomes.
Want to find out if you and your home might qualify for HARP 2.0? It's pretty likely you do. Did you know that about 1 in 5 American homeowners are underwater, so they could use this help? Here's a look at the key questions you need to answer to see if you're on track to getting the chance to refinance.
- Did you buy your house before May 31, 2009? This is the first key. The "sweet spot" for buyers and dropping values is about 2002-2009.
- Does Fannie Mae or Freddie Mac "own" your mortgage note? It's a simple process to find out by calling your mortgage company.
- You must have "qualifying credit" to get refinanced. This will vary by lender, but mid-to-upper 600's is a good rule of thumb when it comes to most mortgage loans.
- A vital key is this: You must be current on your mortgage payments. This means you can't have any 30-day late payments in the last 6 months, and only one late in the last year. If you're behind in your payments, there is another possible assistance program called the Home Affordable Modification Program or HAMP.
One of the exciting things about HARP 2.0 is that with the new financial calculators, you won't need to pay for an appraisal. This saves you money in the process as well. Also, where HARP 1.0 focused on the mortgage company that serviced your loan, HARP 2.0 opens it up to lenders who don't have your loan. In other words, small lenders that can handle these inquires. Some big banks are taking 2-to-3 months to call people back about refinancing. Instead of waiting, call AmeriFirst and you'll talk to someone right away.
You can call or contact us online and we'll see if you qualify for HARP 2.0. If you fill out our form, simply ask in the message area about HARP or refinancing an underwater mortgage.
Meanwhile, if you're interested in refinancing and upgrading your home, check out our "Ultimate Guide to Home Improvement Loans" at the button below.
(underwater house: Steve de Myer)