How to adjust your underwater mortgage
Bakersfield’s real estate bust was certainly one of the worst in the country, and because of that, many homeowners have faced real challenges when evaluating the mortgage on their home. To a lesser extent, there was also plenty of pain felt by homeowners along the Central Coast too. Underwater homeowners wistfully listen to radio ads boasting refinances with ‘record low interest rates’, knowing that taking advantage of those rates in a refinance is simply out of the question.
Compounding an already impossible problem, some homeowners also have an Option ARM that has reset, or is about to.
The Federal HARP (Home Affordable Refinance Program) was announced in early 2009, but few were able to take advantage of the program and one of the primary challenges were the limitations around loan-to-value requirements.
Simply stated, if your mortgage was more than 125% of your home’s current value, you were simply out of luck. And, in many places in Bakersfield’s housing market, we’ve seen as much as 50% of property values simply disappear.
Who Is Eligible for HARP 2.0 Refinance
Reach out to your lender for specific questions or contact our mortgage partner, Prime Lending. Here are some of the things you’ll want consider to determine whether or not you might be eligible for a HARP Refinance are the following:
- You cannot have made more than one late payment in the last 12 months, and none in the last 6 months
- The loan amount cannot exceed current conforming loan limits. California’s upper conforming loan limit is $625,000.
- Your existing loan closed prior to May 31, 2009.
- You’ve not done a HARP refinance. If you took advantage of HARP 1.0, you are not eligible for HARP again.
- Second mortgages are allowed, but the second must approve.
- Second homes and investment properties ARE eligible.
- You may not use HARP if you have an FHA loan. For those homeowners, try the FHA Streamline Refinance Program.
- There is 105% loan-to-value limit if HARP is used to refinance an adjustable rate mortgage or an Option ARM. If you need help with understanding what your valuation is, do not rely on Zillow – it is very inaccurate. Contact a Century 21 Hometown Realty Agent.
- Loan is guaranteed by Fannie Mae or Freddie Mac. This is has nothing to do with who you make your mortgage payments to. To find out if your is guaranteed, check Fannie Mae and check Freddie Mac.
I know this is some downright gripping reading, but I suspect if you are one of the homeowners that can benefit from a HARP refinance, you may very well be on the edge of your seat. If you have questions, if you are curious about your eligibility, don’t hesitate to reach out to us. If we don’t know, we’ll point you in the direction of the lenders we trust to help you get to the bottom of it.