Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.
One upside to the current economic upheaval is that mortgage rates have fallen to their lowest levels in recorded history. Unfortunately, many homeowners who would love to take advantage of this situation by re-financing their homes are unable to do so because they are “underwater” on the property – they owe more on the house than it’s worth in the current market.
Sound familiar? If so, the federal government’s new and improved Home Affordable Refinance Program (I’m calling it HARP 2) might be the answer. Under traditional re-fi standards, applicants typically need at least 20 percent equity in the property in order to re-finance. HARP 2, using the power of Washington, D.C., eliminates that requirement for homeowners. Based on the available information about the program (the full details are not due out until Nov. 15), there appears to be no equity requirement at all. You can be as underwater as the Greek government and you might still be eligible for HARP 2.
Qualifications for HARP 2:
Estimates vary on how many people the program could help. Some economists predict a small impact on as few as 200,000 borrowers. The Obama administration claims one million homeowners could benefit. The economic masterminds at Moody’s Analytics project as many as 1.6 million re-fi’s under HARP 2.
Based on my conversations with local mortgage lenders, real estate brokers and homeowners, I think the number will be on the high side of those estimates.
Are you underwater? How deep? Will you look into HARP? Would you have a philosophical problem taking “government help” on your mortgage?
– By Wes Moss, for Atlanta Bargain Hunter