President Obama recently announced changes to the Home Affordable Refinance Program (HARP). HARP was originally created to help homeowners who had little or no equity to refinance their property to a lower market rate. Currently, the rate on a 30 year fixed loan is around 4%. Under the old plan, a person could refinance only if their loan to value ratio was under 125%. However, many homeowners in Riverside and San Bernardino have seen such a dramatic drop in their equity that they would not qualify to refinance their property under the program guidelines. Under the recent changes to HARP, homeowners qill qualify to refinance their home loans regardless of how far underwater the loan may be. As a result, economists estimate that 1-3 million homeowners could benefit from the program.
In addition to eliminating the limits on home value, the new guidelines also provide that some of the closing costs of the loan will be eliminated making it more affordable to refinance a home loan. These guidelines do not apply to all types of loans but only those that are held by Fannie Mae or Freddie Mac.
While the option to refinance a loan may be a good option for someone looking to stay in their home longterm, it will do nothing to alleviate the US economic condition. In particular, it does not address the key problem in the housing industry which is home values have fallen far below their value. As a result, many homeowners are left with limited options. In many cases, they can choose to pay an inflated mortgage payment or try a home loan modification if they want to stay in the property.
If you are considering this as an option to make your payments more reasonable, feel free to check out the HARP guidelines at the Making Home Affordable website. Although this is not a service we provide, we would be happy to go over all of your legal options in keeping your home and making it more affordable.