What do homeowners do now if they have NO equity? How to help yourself!

The Housing Crisis. The Housing bubble. The housing mess. On and on we go with terms to describe the current situation in housing.

For homeowners who have no equity, or worse, are upside down – meaning that they owe more than the property is worth the choices and options have been unappealing.

There are many concerns regarding the current status of the housing market, and now, the Government is aatempting to address a segment of the market by enhancing the HARP (Home Affordability Refinance Program).

What is the HARP program?

The HARP program is the Home Affordability Refinance Program, created by the government as a venue to refinance homeowners who have little or no equity in their primary residence. The program required that the current mortgage be owned by one of the two mortgage giants, Fannie Mae or Freddie Mac and be delivered or sold to one of these agencies by May 31, 2009. . Since 50% of all mortgages are owned by the two GSEs, the impact was expected to be large.

Are there any options that can be done for homeowners who are upside down in today’s market?

For homeowners who have no equity or are upside down, most of the solutions have been around short selling the home. A short sale is where the homeowner negotiates with the current lender or lenders (in the event that there is more than one mortgage), and requests that they accept a payoff that is less than the amount owed.

Another option has been to walk away from the property alltogether and let the bank sort out the issue by foreclosing on the property.

So, the new HARP program is a way for homeowners to refinance at market interest rates, and to convert from adjustable loans or higher interest rates into a better long term option.

The program allows a refinance of a mortgage even when the balance is 125% of the current market value, and if there is a second mortgage, can go even higher.

So, what is the fine print?

Of course, there are limitations to the program, and they are as follows -

1) The mortgage must be owned by Fannie or Freddie, and it must be delivered to them by May 31, 2009.

2) The mortgage payments must be made on time for the past 12 months

3) You still need to verify your income to acceptable standards to the lender

4) You may need an appraisal, although it is possible that no appraisal would be required

How do I find out if my mortgage is owned by Fannie or Freddie?

There are free websites for you to review whether your mortgage is owned by one of the agencies -

https://ww3.freddiemac.com/corporate/ for mortgages owned by Freddie Mac

www.fanniemae.com/loanlookup/ for mortgages owned by Fannie Mae

So how do I then get one of these HARP loans?

Many banks only offer these if they already own your mortgage, so often the best venue is for a mortgagae broker who works with lenders that offer this program. For example, our company brokers to 40 different lenders but currently only 12 of them offer this program. Companies like B of A and Citi do not offer them.

Summary

Before you short sale or walk away from your property, check to find out if you qualify for this program as a way to dramatically change your terms and interest rate. The difference can save your credit AND your home.

The new HARP 2.0 – how to take care of homeowners today with no Equity in their home!

The Housing Crisis. The Housing bubble. The housing mess. On and on we go with terms to describe the current situation in housing.

For homeowners who have no equity, or worse, are upside down – meaning that they owe more than the property is worth the choices and options have been unappealing.

There are many concerns regarding the current status of the housing market, and now, the Government is aatempting to address a segment of the market by enhancing the HARP (Home Affordability Refinance Program).

What is the HARP program?

The HARP program is the Home Affordability Refinance Program, created by the government as a venue to refinance homeowners who have little or no equity in their primary residence. The program required that the current mortgage be owned by one of the two mortgage giants, Fannie Mae or Freddie Mac and be delivered or sold to one of these agencies by May 31, 2009. . Since 50% of all mortgages are owned by the two GSEs, the impact was expected to be large.

Are there any options that can be done for homeowners who are upside down in today’s market?

For homeowners who have no equity or are upside down, most of the solutions have been around short selling the home. A short sale is where the homeowner negotiates with the current lender or lenders (in the event that there is more than one mortgage), and requests that they accept a payoff that is less than the amount owed.

Another option has been to walk away from the property alltogether and let the bank sort out the issue by foreclosing on the property.

So, the new HARP program is a way for homeowners to refinance at market interest rates, and to convert from adjustable loans or higher interest rates into a better long term option.

The program allows a refinance of a mortgage even when the balance is 125% of the current market value, and if there is a second mortgage, can go even higher.

So, what is the fine print?

Of course, there are limitations to the program, and they are as follows -

1) The mortgage must be owned by Fannie or Freddie, and it must be delivered to them by May 31, 2009.

2) The mortgage payments must be made on time for the past 12 months

3)

The new HARP 2.0 – how to take care of homeowners with no Equity

The Housing Crisi. The Housing bubble. The housing mess. On and on we go with terms to describe the current situation in housing.

There are many concerns regarding the current status of the housing market, and now, the Government is enhancing the HARP (Home Affordability Refinance Program).

Are there any options that can be done for homeowners who are upside down?

For homeowners who have little or no equity, most of the

The new HARP 2.0 – how to take care of homeowners with no Equity

The Housing Crisi. The Housing bubble. The housing mess. On and on we go with terms to describe the current situation in housing.

There are many concerns regarding the current status of the housing market, and now, the Government is enhancing the HARP (Home Affordability Refinance Program).

Are there any options that can be done for homeowners who are upside down?

For homeowners who have little or no equity, most of the

The new HARP 2.0 – how to take care of homeowners with no Equity

The Housing Crisi. The Housing bubble. The housing mess. On and on we go with terms to describe the current situation in housing.

There are many concerns regarding the current status of the housing market, and now, the Government is enhancing the HARP (Home Affordability Refinance Program).

Are there any options that can be done for homeowners who are upside down?

For homeowners who ha

The new HARP 2.0 – how to take care of homeowners with no Equity

The Housing Crisi. The Housing bubble. The housing mess. On and on we go with terms to describe the current situation in housing.

There are many concerns regarding the current status of the housing market, and now, the Government is enhancing the HARP (Home Affordability Refinance Program).

Are there any options that can be done for homeowners who are upside down?

 

The new HARP 2.0 – how to take care of homeowners with no Equity

The Housing Crisi. The Housing bubble. The housing mess. On and on we go with terms to describe the current situation in housing.

There are many concerns regarding the current status of the housing market, and now, the Government is enhancing the HARP (Home Affordability Refinance Program).

Is there anything that can be done

The new HARP 2.0 – how to take care of homeowners with no Equity

The Housing Crisi. The Housing bubble. The housing mess. On and on we go with terms to describe the current situation in housing.

There are many concerns regarding the current status of the housing market, and now, the Government is

The new HARP 2.0 – how to take care of homeowners with no Equity

The Housing Crisi. The Housing bubble. The

Is now a good time to move to a Shorter Term fixed Mortgage like a 15 or 20 year?

Interest rates. They rise and fall like a roller coaster, and make it difficult to determine when you should buy a home or refinance.

When refinancing, one of the most common questions I face with clients is what is the apppropriate term, could we go shorter than the 30 year fixed? SHOULD we go shorter than the 30 year fixed?

What do I need to know to make this determination?

There are many factors to determine, starting with:

How long do I intend to stay in this house?

When do we plan on retiring?

What will our income be when we retire?

The shorter term mortgages definately mean  higher payment, and in turn a SHORTER time of paying back the mortgage, but is it significant?

Here are a couple of examples to consider:

Assuming a mortgage amount of $417,000 and a 30 year fixed rate of 4.00%, your monthly payment would be $1990.82 before adding taxes and insurance.

On a 20 year term, with an interest rate of 3.875%, the payment jumps to $2499.56 each month. So the payment is $508 higher, BUT we lose 10 years of payback. 10 years of $1990 per month equals $238,800 in reduced payments ($1990 x 120 months).

Your payment is $508 higher for 20 years, and that cost is $121,920, meaning that your overall payback is $116,880 less.

On a 15 year fixed loan, assuming a loan amount of $417,000 and an interest rate of 3.625%, the monthly payment would be $3006.72. The monthly payment would be $1016 higher each month, or $183,010 in higher payments over 15 years.

HOWEVER, by reducing the term of payback by 15 years ($1990 x 180 = $358,200) the savings is even MORE DRAMATIC.  The amount of overall savings would be $175,190!

The primary final question would then be, can we handle payment more each month?

The monthly increased payment means you have to budget for it, either by paying off a bill, changing your income tax withholding or from wage increases.

How cool would it be that the next time you get a 5% raise it means that your mortgage could be paid off 10 years faster?

The same principals apply with a home purchase!

Being frugal with a raise or paying off a debt like a car allow you to afford more payment each month, but what if you instead paid off the mortgage faster?

Since home prices have dropped consistently in nearly every area of the country, this would be great timing to have a shorter term of payback.

Summary

If you have a current home that is on a 30 year fixed, switching to a 15 or 20 year loan can make a huge impact in the long run. It takes discipline and planning, but visualize no mortgage payment of any sort down the road, how cool would that be?