1. WHAT IS HARP?
HARP stands for Home Affordable Refinance Program. If you are not behind on your mortgage payments but have been unable to get traditional refinancing because the value of your home has declined, you may be eligible to refinance through HARP. It is designed to help you get a new, more affordable, mortgage. HARP loans require a loan application and underwriting process and refinance fees will apply.
You may be eligible for HARP if you meet all of the following criteria:
• The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
• The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
• The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
• The current loan-to-value (LTV) ratio must be greater than 80%.
• The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.
2. SHOULD I REFINANCE MY MORTGAGE?
If you fit the criteria mentioned above, then you should apply for a refinance of your mortgage under HARP if you are unable to get a traditional refinancing. There are a few reasons why people consider refinancing their current mortgage. Understanding the big picture of what comes with getting a new mortgage can help you determine if refinancing is right for you. The two main reasons to refinance is to obtain a loan with a fixed rate and to refinance to lower your current rate. The general rule of thumb is that refinancing to a fixed-rate loan makes the most sense when interest rates are low. While no one can predict whether rates will go up or down in the future, many homeowners are currently taking advantage of today’s low rates to refinance from their adjustable-rate mortgage to a new fixed-rate mortgage.
The main benefit is stability. While an adjustable-rate loan’s monthly payments can fluctuate, the monthly payment of principal and interest on a fixed-rate loan will stay the same throughout the life of the loan. This can make it easier to set your monthly budget Information Panel, and can also provide peace of mind. With a fixed-rate loan, even if market interest rates go up, your principal and interest payments won’t.
3. WHEN IS THE BEST TIME TO REFINANCE?
The general rule of thumb is that refinancing to a fixed-rate loan makes the most sense when interest rates are low. While no one can predict whether rates will go up or down in the future, many homeowners are currently taking advantage of today’s low rates to refinance from their adjustable-rate mortgage to a new fixed-rate mortgage. If you choose to refinance to a fixed-rate loan, you may also have the opportunity to make additional changes to your loan at the same time. Depending on your circumstances, you may also be able to lower your monthly payments, shorten your loan term, or borrow from a portion of your available home equity. Talk to your lender about what you’d like to accomplish and see what’s achievable for your situation.
4. WHAT ARE THE CURRENT MORTGAGE RATES?
Below is a three month mortgage trend that will give you a good idea as to what rates you can anticipate to pay
12/4/2013 4.55 3.62 3.33 4.57
11/27/2013 4.44 3.47 3.29 4.45
11/20/2013 4.39 3.42 3.28 4.42
11/13/2013 4.48 3.49 3.33 4.51
11/6/2013 4.35 3.42 3.25 4.44
10/30/2013 4.27 3.38 3.26 4.35
10/23/2013 4.27 3.37 3.27 4.38
10/16/2013 4.42 3.49 3.31 4.55
10/9/2013 4.39 3.47 3.34 4.58
10/2/2013 4.41 3.47 3.4 4.58
9/25/2013 4.47 3.53 3.41 4.64
5. WHICH REFINANCE OPTION IS BEST FOR ME?
This depends on the current value of your residence, your current loan structure, the amount of equity that you have in your home, the interest rates at the time that you want to refinance and your current income. Many homeowners refinance because they want to get out of (or into) an adjustable-rate mortgage. In high interest rate environments, homeowners are attracted to ARMs because they typically are at a much lower interest rate than a 30-year fixed-rate mortgage. On the other hand, in low interest rate environments, the differential between the fixed-rate and the ARM isn’t as great, and homeowners like the security of locking in a fixed rate over the mortgage term.