Home Affordable Refinance Program – How Does It Work?

April 12, 2012 by  Filed under: Loans 

HARP 2.0 loans have finally been approved and are in full swing to help underwater homeowners reduce monthly mortgage payments. Currently available for Fannie Mae and Freddie Mac secured loans, millions of homeowners can now receive genuine help by way of lower interest rates. The original “Home Affordable Refinance Program” that was launched in April of 2009, was too strict and as a result less than ten percent of applicants qualified for any kind of assistance. Many have been awaiting the good news of revisions and improvements since October of 2011. It appears that the difficult journey has paid off and some economists feel that HARP 2.0 loans will help to stabilize the foreclosure market.

During these last four years the economic climate has triggered record foreclosures and mortgage defaults. Multitudes have expressed disappointment with the government, as the real estate market collapse has also collapsed scores of Americans’ dreams. After what appeared to be an endless ocean of red tape, the latest version of HARP 2.0 is offering realistic solutions to help homeowners rebuild equity in their homes. Just this past February one out of every 637 homes nationwide received documents announcing foreclosure proceedings. The main goal of the HARP 2.0 program is to reward homeowners who have continued paying on their mortgages, while dissuading disillusioned underwater homeowners from giving up and throwing in the proverbial towel.

It is estimated that as many as five million homeowners will benefit from the revisions to HARP 2.0. One of the main requirements is to have a maximum of one late payment within the last 12 months and none within the last six months. The property must be at 80% LTV or “loan to value” or higher, meaning that a house cannot have more than 20% equity, yet there is absolutely no limit or restriction to the negative LTV. As an example, someone who purchased a house in 2007 for $400 thousand at a rate of 6.125%, can still refinance that very same house that today is only worth $275 thousand at a reduced rate of 4.375%. The savings can provide borrowers breathing room for other household expenses, or the savings can be applied towards the principal in order to shave years off the mortgage payment.

For those who invested in real estate beyond the purchase of a primary residential unit, the good news is that previous bankruptcies or foreclosures are not an impediment, provided the payment history on the subject property meets the criteria. Depending on the actual loan amounts people are reporting monthly savings ranging anywhere from $78 to $394 per month.

The “Home Affordable Refinance Program” is finally able to help folks restructure and lower their monthly payments. Financially savvy homeowners are actively planning to accelerate their payments and shave years off the mortgage. Regardless of how the homeowner chooses to use the monthly savings, the reality is that every penny saved is definitely a penny earned. Any monthly saving can add up to make a big difference, whether it is used to pay down credit cards, pay for college, save up for a family vacation or to simply save for a rainy day. Meeting the HARP 2.0 guidelines and reducing monthly mortgage payments is now easier than ever.

To learn more about HARP 2.0 guidelines visit http://www.harp-refinance-info.com.

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