Saturday, June 09, 2012

Pushing refinancing can really help

Recent news reports suggest current borrowers are still having some difficulties getting a HARP 2.0 refinancing.  This is too bad, because HARP 2.0 can potentially help a lot in getting many people out from under their troubles.

Consider someone who is 20 percent underwater on her house.  If she moves from a six percent loan to a 3.5 percent loan (today's rate on Zillow), and if house prices go up by only one percent per year (something that I think likely will happen in most markets, for reasons I stated a week or so ago) and if the borrower keeps her payment constant, she will be right-side-up in around four years.  If she remains in the six percent mortgage, however, she won't be right-side up for about nine years.

Note the HARP 2.0 is not rewarding "bad behavior."  It is program for people who are current on their payments but who are also upside down.  Many people can look at four years and see a tunnel's end--I am not sure that is true about nine years.

Of course, refinancing will not solve the Vegas-Phoenix-Inland Empire problem, where many borrowers are 30 percent underwater and more.  But for a whole lot of the country, HARP 2 could be a game changer.


Unknown said...

Thanks for sharing great information...Refinancing

Felicity Miles said...

I really do not understand why so many people , when they start having financial problems, do not apply for refinancing. There is nothing to be ashamed of. I think it is a great thing. It is anyway better than getting one more loan from one of lending companies such as Ameriloan Search( even though this one is rather reputable). So thank you for the articel, it may be a big help for people with money problems.

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