HARP Loans and Refinance
When homeowners on hard times are sinking fast, a home refinancing company like Diditan Financial can help them qualify for the Home Affordable Refinance Program (HARP)–an opportunity established by the Federal Housing Finance Agency in March, 2009 designed to rescue underwater homeowners and those sinking fast by refinancing their mortgages. HARP loans help homeowners who have very little to no equity ease into low and manageable interest rates, as well as a plethora of other refinancing allowances.
Who Qualifies for HARP Loans?
The criteria one must meet to be eligible for HARP loans includes:
- Your loan must be guaranteed or owned by Fannie Mae or Freddie Mac.
- You must have 12 solid months of good payment history with no late payments in the last six months and no more than one 30-day late payment within the last six to 12 months.
- The value of your home has decreased.
- Your home is your only residence.
- Your mortgage exceeds the current value of your home or you have very little equity with a minimum of 80 percent in your home-to-value ratio.
- Your loan was closed on or before May 31, 2009.
There are more things to know about the HARP loan worth investigating to determine if it is truly your best home loan option, and to see if you qualify. In the event you don’t qualify, our team at Diditan Financial can help you find a refinancing solution that will better accommodate your needs. In the event you are eligible for HARP loans, we can help you through the process so it is handled quickly and efficiently while answering all of your questions.
What are the Problems with HARP Loans?
In order to determine if HARP refinancing can benefit you, one must first unearth the problems with the program and consider their impact on an individual level. Although HARP loans have lenient guidelines, their main drawback is they simply don’t help enough people. It also bares the hallmark of a walking catch-22: you can’t have a late mortgage payment within six months from the time you apply, yet it is for people who can’t afford to pay their current mortgages.
First of all, HARP loans do not reduce your principal balance; they actually make it greater and, once principal kicks in, you can’t sell because you owe too much. Doing a HARP refinance also does nothing towards shaving the sides off your mortgage insurance. On one hand the payment amount might fall when your lower interest rate kicks in, but when it shoots up so too will your insurance payments. Also, according to Fannie Mae’s rules and regulations, if you didn’t have mortgage insurance prior to HARP loan enrollment, you won’t be eligible to get it during the duration of the finance.
Do you have plans to update your kitchen or put in a pool with a home equity loan? If so be aware that if you go through a HARP refinance, you will not be eligible to refinance such a loan, or open up new ones. You can always approach a second lender with the opportunity to be subordinate, but there will be little incentive for them to agree. After all, you have no equity, or very little of it.
Is it Good to Shorten the Terms on a HARP Mortgage?
In the event a borrower owes more money on the mortgage than what the home’s value is appraised at , he will naturally want the freedom to have more financial options to help pull him from an underwater position. Having shorter terms can prevent homeowners from being locked into mortgages that have turned catastrophic. A mortgage with shorter terms lets borrowers pay off loans faster than traditional 30-year mortgages, and with short-term mortgages you generally benefit from lower interest rates. In fact, just being able to pay lower interest rates may allow borrowers to pay off their loans much faster. Diditan Financial is staffed with industry veterans who know how to analyze a borrower’s portfolio in vivid detail, and determine what type of loan makes the best financial sense. In some cases our team of professionals have even been able to get clients into a short-term HARP loans that saw a reduction in payment amounts. This has fortified the homeowner’s financial health, and even lower their credit risk. Here are some examples from past clients for your consideration:
- Assume a homeowner currently has a mortgage on which he or she owes $220,000 and has an interest rate of 6.25 percent – a monthly payment of $1354.58. If the house is worth $180,000, the homeowner has a current loan-to-value (LTV) ratio of 122.22 percent.
- If this borrower refinanced into a 30-year fixed-rate mortgage with an interest rate of 4.25 percent, the monthly payment would decline to $1082.27. But, by refinancing into a 30-year loan, the borrower’s loan balance will not reach $180,000 fornearly ten full years.
- If the borrower chose a 20-year loan term at a rate of 4.00 percent (mortgage rates tend to be less for shorter term mortgages), the monthly payment would be $1333.16 ($21.42 less than the borrower currently pays) and the borrower’s loan balance would reach $180,000in five years and three months.
- If this same borrower refinanced into a 15 year mortgage, assuming an interest rate of 3.50 percent, the monthly payment would be $1572.74 ($218.16 more than the current payment), but the loan balance would be below $180,000 in a little over three years and two months.
Call Diditan Financial experts today to find the absolute best terms and conditions in various HARP loans that go missed by big banks and other financing institutions. We fight for our clients, and we stop at nothing to ensure they have an ideal, comfortable mortgage that will secure their future prosperity.
Can a HARP Refinance Save me Money?
Does Refinancing Under HARP Affect Your Credit?
There are a number of contributing factors that weigh into how refinancing under HARP affects your credit. It is common to witness counterbalancing acts on your credit score when you refinance your mortgage under HARP. Depending on your unique situation, this could be an ideal solution, or one not so favorable.
Let’s consider the unflattering impact: Certain altercations made to credit accounts, especially mortgages, can have dire consequences to your credit score. According to the Fair Isaac Corp (FICO) those with better credit scores have much more to lose than those with lower credit scores. Considering the fact that HARP loans kicks out an old account taking its place, that old line of credit is closed and a brand new one is created at the exact same time. This new loan is then reported to TransUnion, Equifax, and Experian as a new loan with a fresh start date, which gives it the guise of a brand new account, and one of the leading origins of a lowered credit score is the opening of a new account.
Consider this: refinancing through HARP might tarnish your credit score, but it is a significantly better alternative to missing a payment, or worse yet having to foreclose–two actions that can dramatically lower your credit score and raise red flags that a refinance would otherwise avoid. Just missing a payment or making a late one can slash a score by 40 to 110 points, and the higher your credit score prior to the missed or late payment, the greater the damage. Going into foreclosure can lower your credit score by 85 to 160 points. Finally, refinancing through HARP loans is not available to homeowners who have made a late payment within the last six months.
Diditan Financial is here to help our clients go through a HARP refinance while keeping their credit scores as healthy as possible. Here is something a lot of home finance companies don’t like to share: every time an inquiry is made into your credit by a lending institute or finance company, it slightly hurts your credit score. Some people have multiple companies and banks run their credit, and have no idea that they are unnecessarily punching holes in their credit score. Just have our Diditan Financial professionals run your credit once in order to determine your best course of action for the most favorable terms, conditions, and rates. Let’s do it right the first time!
Why You Should Choose Diditan Financial: Your HARP Loans Vanguard
From the first conversation you have with us, you will see why we are a trusted leader in helping people achieve their dreams of homeownership. We genuinely want you to take advantage of what HARP loans may have to offer. This is what makes us stand out from big bank financing: we are family owned, deeply rooted into the framework of facilitating homeowner growth, and we are YOUR vanguard in home loans and refinancing, from start to finish. We offer an individually catered, unique, hassle-free service to each client with total transparency while presenting all of your options, and educating you on current and predictable outcomes. Dididan Financial honors home and family, and every family deserves a place to call home funded by a simple mortgage solution that is easy for our customers to manage, and that won’t impact their lifestyle or pose other concerns such as a short sale or foreclosure. Our shield is hoisted 24/7–this means we protect our clients from predatory lenders, and we engage a scrimmage to close your loan quickly while working around the clock to save you money and ensure your family’s future security. Our company was built to serve families and individual buyers. It was also founded and is still operated by a close-knit family of homebuyers who are truly passionate about passing on their knowledge to the present and next generation of home buyers. Let us show you how genuine care and innovative home financing can make your dreams a living reality!