Tuesday, December 17, 2013
Freddie Mac Myth's
A Freddie Mac senior vice president is using the company's blog to debunk a few myths she says may be keeping homeowners from refinancing through HARP, the Home Affordable Refinance Program. Tracy Mooney's information about on nine HARP misconceptions might not only be helpful for homeowners themselves but a good resource for lenders to share with customers and the public.
1. Myth One is that refinancing with HARP (or any other program for that matter) would reset the clock and the borrower would again be looking at 30 years of mortgage payments. This, as Tracy points out, is not true as almost any refinancing allows the borrower to pick a term from 10 to 30 years for the new loan. The counterpoint is that most borrowers opt for a 30yr term and this does indeed entail a new 30 years of payments. Even then, if the interest rate is lower and the borrower simply continued paying the original mortgage payment, less interest would be paid over time and the loan would be paid off faster than the original would have been. Bottom line: all things being equal, dropping the rate is advantageous in most cases.
2. Some borrowers have so many offers to refinance coming their way they fear some may be scams. Mooney says that many legitimate offers have specific information identifying the borrower's existing loan such as the account number. Also the borrower can report any suspicious offers at 888-995-HOPE. When in doubt borrowers should check with their current lender.
3. Another myth is that HARP can't help homeowners who are underwater on their mortgage. That, in fact, is what HARP was designed to do and has no restrictions on loan-to-value ratios for fixed-rate mortgages.
4. The fourth myth is that refinancing is hopeless for the unemployed. HARP does offer options that might work such as underwriting based on assets rather than income. Borrowers should reach out to their lender to discuss available solutions.
5. It is possible to refinance through HARP even if the borrower's current lender doesn't participate in the program. Freddie Mac and Fannie Mae have lists of lenders who can discuss options and eligibility with anyone.
6. Some people believe they are ineligible if they currently have an adjustable rate mortgage (ARM). HARP was in fact created to help such homeowners obtain mortgages that are more stable and sustainable. With rates still so low it is the perfect time to lock into a fixed-rate mortgage
7. Myth Seven is that condos are not eligible for HARP refinancing. Not only are condos eligible but so are investment properties and second homes.
8. It isn't always necessary to have sufficient cash up front to pay closing costs. Lenders can evaluate whether a borrower qualifies to have closing costs and other necessary expenses rolled into the new loan.
9. Finally many homeowners think HARP is only for those who are behind in their payments and in danger of foreclosure. In fact HARP is intended specifically for homeowners who are current on their mortgages but are underwater and unable to refinance through a traditional refinance programs
Moony said potentially millions of homeowners could save money each month by refinancing through HARP. The program has more than 2.9 million success stories so hopefully if you now know these myths are just that, she says, reach out to your lender and get started with HARP because, "Saving money is a good thing!"
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