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.
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.
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.
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
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.
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.
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
Seven is that condos are not eligible for HARP refinancing. Not only are condos eligible but so are
investment properties and second homes.
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
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