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Today's low interest rates
Refinancing activity has gone through the roof the past couple of years due to today's low interest rates. I've seen examples of where homeowners were able to reduce the interest on their $435,000 mortgage from 6.616% to 4.125% and save $630 a month. Of course, there were closing costs associated with the deal but they were able to recoup them within a few months of signing the new mortgage.
The left behind
There was one type of homeowners who were not able to participate in this boom. This was the ones whose houses were underwater so they didn't have sufficient equity in their homes to qualify for a refi. However, many of these homeowners are now eligible to participate in a program designed just for them.
If you're still paying your mortgages on time
Homeowners who are still paying their mortgages on time, despite the fact they’re underwater, can now qualify for a program called the Home Affordable Refinance Program ( HARP). This program gives these homeowners access to the low rates that so many other homeowners took advantage of, meaning that they too are able to lower their mortgage payments.
Are you passing up on this free money?
Strangely enough, many homeowners are not taking advantage of this program. For example, Quicken has reported that of all those who would qualify for HARP, only about 25% actually refinance. While no one knows for sure the reasons for this, it is thought that it's due to the old adage "once bitten, always wary". In other words, they were burned once in the big mortgage meltdown of 2007 and are unwilling to take a second chance even with what's a good program.
Where do you stand?
So where do you stand? Have you been approached by Quicken or some other mortgage originator that suggested you apply for HARP? And did you turn down the offer? This means you're basically passing up on free money. The HARP program is a sweet deal that could help you shave hundreds of dollars off your mortgage payment by giving you access to the very low rates that others have enjoyed. Plus, HARP is good for our economy because the less money you have to spend on your mortgage payment, the more money you’ll have to spend on other things.
Contact a loan originator
If someone contacted to you about HARP and you turned it down, call him or her back and get started on restructuring that mortgage. If you’re underwater but have been making your mortgage payments on time, contact one or two loan originators to see see if you might qualify. It’s said that it’s very easy to qualify for the program and the application process is very streamlined. The net/net is that this could mean free money and why would you want to turn down free money?