If you’re a homeowner who is unable to refinance to a lower interest rate because your Santa Cruz home’s value has decreased, there’s hope.
A program called the Home Affordable Refinance Program (HARP) has been extended for another year. This program, intended to help borrowers whose homes have fallen in value, was due to expire as of June, 2010. Fortunately, HARP has been extended and will now stay in effect through June 30, 2011.
How does HARP help?
The program allows qualified borrowers who owe more than their homes are worth to refinance at lower interest rates. It’s projected to help 4 to 5 million homeowners with loans owned or guaranteed by Fannie Mae and Freddie Mac.
If you’re a Santa Cruz home owner whose mortgage interest rate is significantly higher than the current market rate, you could see an immediate reduction in your payments. However, some homeowners may not see their interest payments go down if they refinance to a fixed rate and payment.
Those include homeowners who are:
• paying interest only
• have a low introductory rate that will increase in the future
• face a balloon payment
If you are one of these homeowners, you should still consider refinancing because it could save you a great deal of money by reducing the amount of interest you pay over the life of your mortgage.
Who qualifies for HARP?
You may qualify if:
• You own and live in your home.
• The loan on your home is owned or guaranteed by Fannie Mae or Freddie Mac.
• When you apply, you are current on your mortgage payments.
• The amount you owe on your mortgage does not exceed 125% of the current market value of your property.
• You’re able to pay the new mortgage payments.
• The refinance improves your ability to pay your mortgage long term.