If you are underwater on your home, chances are you're like many Americans, and me, across the country. What do I mean by “underwater”? I mean that your home is worth less than you owe. So for example, you home could be worth only $150,000 and the amount you owe could be $300,000. That's not the best situation to be in. No one likes having negative equity in their home; you can't borrow against it and you can't refinance it (usually). And then there are the intangibles…you are most likely depressed and distraught over the situation and feel like there is no end in sight.
Have you wondered how Wall Street banks could be bailed out when they messed up the housing situation and why you're stuck paying off your monthly mortgage payment when you did nothing wrong except maybe buy at the wrong time – ie, the height of the bubble? I sure did. I was super frustrated that Wall Street messed up and they got us, the taxpayer, to bail them out when I, the homeowner, was stuck upside down on my home.
Recently, I started to sing a different tune. I learned about this new program called Home Affordable Refinance Program or HARP 2.0. After doing some research I learned that this program allows for some underwater homeowners to refinance their home. Being underwater myself, I checked out this program and started to research if I could qualify for the HARP Loans program.
I read that I needed to have a loan owned by Fannie Mae or Freddie Mac. Check. I had to have bought my home before May 31, 2009. Check. I had to be current on my mortgage payments. Check. I couldn't have used any previous version of the HARP loan program. Check.
It took about 60 days to complete the refinance but I finally got this taken care of and am saving $300 per month on my mortgage payment.
There was one hiccup that almost hindered the HARP Loan from going through. I had to subordinate my second mortgage with my current bank. This took some time but I was happy with the outcome. What does it mean to “subordinate” my second mortgage? This means the 2nd mortgage will not move to first position after the 1st mortgage is paid off. HARP 2 is intended for 1st liens only – not 2nd or 3rd liens. Traditionally, when you pay off your first mortgage, the second mortgage hops up into the first position. But to make sure the 2nd mortgage stays in place, it needs to be subordinated. It doesn't matter if your second mortgage is backed by Fannie Mae or Freddie Mac. These mortgages, I learned, are basically ignored as part of the HARP 2.0 program.
I also lowered my interest rate a whole point. I am stoked! I encourage anyone who is underwater on their home to check their eligibility to see if they can take advantage of this program.
David lives in San Diego, CA and works with his team to help underwater homeowners refinance nationwide. To learn more about HARP Loans contact us. David’s site has information about this program as well as qualification guidelines.