Sometimes it's more about the big things than the penny pinching. Here's how I'm saving $300 a month with a HARP refinance.
While I don't have a problem with penny pinching?per se,?I'm more of a “look for big savings” type of gal. Saving on the big stuff?and a focus on building wealth/earning more is, I think, more likely to lead to long-term financial freedom than trying to save a few cents — or even a few bucks — every day.
So, in an effort to log some significant savings each month, I?finally decided to refinance my home. Not only does this affect my monthly cash flow, but it also means a savings of tens of thousands of dollars over the life of my mortgage (assuming we don't move anytime soon).
Because our home is rather short on equity, we went with a HARP refinance. Overall, it was a good experience, and the company we went with, Quicken Loans, proved competent and fast.
HARP Refinance for Responsible Homeowners
Many responsible homeowners found themselves with negative equity as a result of falling home values after the financial crisis. We were in this boat, as well as seeing equity problems as a result of the fact that we might not have?strictly been ready to buy a home.
We ended up with a small second mortgage on the home, and met the minimum down payment for a FHA loan. When it came time to refinance, though, our lender wouldn't deal, and neither would our primary bank.
I knew that we qualified for HARP, but we were still having trouble. That's when I went ahead and clicked on a “deal” while on the Credit Sesame web site. Quicken Loans got right back to me, and we initiated the refinance process.
There were points where things were a little dicey, with my self-employed income and the documentation process, but the Quicken people got us through. It took a little more than six weeks from beginning to close, and, because it was a HARP refinance, we didn't have to worry about getting an appraisal. Our closing fees will be recouped in a little less than six months, and we are saving $300 a month.
We refinanced to a 30-year mortgage, rather than a 15-year, since it's nice to have the flexibility to pay more if we want to accelerate the process. However, if something happens with my freelance business, we have the option to meet our current mortgage payment (which is now about 1/8 of our monthly income). We chose a bi-weekly schedule, so that means an extra mortgage payment each year.
Could You Benefit from a HARP Refinance?
Right now, your loan has to be guaranteed by Fannie Mae or Freddie Mac if you want a HARP refinance. If you got a FHA loan, there is a good chance you qualify. You can ask your bank if you qualify, or you can look up your loan with the help of the MHA site.
As long as your loan is good standing, and you haven't had major issues with payment in the last 12 months, and as long as your mortgage was sold to Fannie or Freddie before May 31, 2009, you might qualify.
Keep in mind that this program is designed for those who have been good about making payments, but who still have high loan-to-value ratios. You must have a LTV of at least 80% to get a HARP refinance, and you can refinance a home with a LTV of up to 125%.
If you want a lower interest rate, but you have been struggling with a refinance, a HARP refinance might be just the thing. It's been beneficial for us. With the extra $300 a month, we can pay down our mortgage faster, invest more in retirement, or do something else with the money. And it's nice to know that we have an interest rate of less than 4% — rather than more than 6%.
is scheduled to end December 31, 2013, ?so if you want to save on your mortgage payment, you need to make your move soon.?has been extended through 2015.