HARP Myths Debunked by Freddie Mac Exec

A Freddie Mac senior vice president is usingrnthe company’s blog to debunk a few myths she says may be keeping homeownersrnfrom refinancing through HARP, the Home Affordable Refinance Program.  Tracy Mooney’s information about on nine HARPrnmisconceptions might not only be helpful for homeowners themselves but a good resourcernfor lenders to share with customers and the public.</p

1.     rnMythrnOne is that refinancing with HARP (or any other program for that matter) wouldrnreset the clock and the borrower would again be looking at 30 years of mortgagernpayments.  This, as Tracy points out, isrnnot true as almost any refinancing allows the borrower to pick a term from 10rnto 30 years for the new loan.  The counterpoint is that most borrowers opt for a 30yr term and this does indeed entail a new 30 years of payments.  Even then, if the interest rate is lower and the borrower simply continued paying the original mortgage payment, less interest would be paid over time and the loan would be paid off faster than the original would have been.  Bottom line: all things being equal, dropping the rate is advantageous in most cases.</p

2.     rnSomernborrowers have so many offers to refinance coming their way they fear some mayrnbe scams.  Mooney says that manyrnlegitimate offers have specific information identifying the borrower’s existingrnloan such as the account number.  Alsornthe borrower can report any suspicious offers at 888-995-HOPE. When in doubtrnborrowers should check with their current lender.</p

3.     rnAnotherrnmyth is that HARP can’t help homeowners who are underwater on theirrnmortgage.  That, in fact, is what HARPrnwas designed to do and has no restrictions on loan-to-value ratios forrnfixed-rate mortgages.</p

4.     rnThernfourth myth is that refinancing is hopeless for the unemployed.  HARP does offer options that might work suchrnas underwriting based on assets rather than income.  Borrowers should reach out to their lender torndiscuss available solutions.</p

5.     rnItrnis possible to refinance through HARP even if the borrower’s current lenderrndoesn’t participate in the program. rnFreddie Mac and Fannie Mae have lists of lenders who can discuss optionsrnand eligibility with anyone. </p

6.     rnSomernpeople believe they are ineligible if they currently have an adjustable raternmortgage (ARM).  HARP was in fact createdrnto help such homeowners obtain mortgages that are more stable and sustainable.  With rates still so low it is the perfectrntime to lock into a fixed-rate mortgage</p

7.     rnMythrnSeven is that condos are not eligible for HARP refinancing.  Not only are condos eligible but so arerninvestment properties and second homes.</p

8.     rnItrnisn’t always necessary to have sufficient cash up front to pay closing costs.  Lenders can evaluate whether a borrowerrnqualifies to have closing costs and other necessary expenses rolled into thernnew loan.  </p

9.     rnFinallyrnmany homeowners think HARP is only for those who are behind in their paymentsrnand in danger of foreclosure.  In fact HARP is intended specifically for homeowners who are currentrnon their mortgages but are underwater and unable to refinance through arntraditional refinance programs</p

Moony said potentially millions ofrnhomeowners could save money each month by refinancing through HARP.  The program has more than 2.9 million successrnstories so hopefully if you now know these myths are just that, she says, reachrnout to your lender and get started with HARP because, “Saving money is a goodrnthing!”

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