The housing market is red hot again in many areas of the county but there are still millions of homeowners who are underwater or just treading water on their mortgage, meaning that they either currently owe more on their mortgage that what the home is worth or they are close to a break-even point on what they owe vs. what their home is worth but their home equity is slow-growing. If you or a loved one is currently underwater on their home, you are not alone and you do have options. One of the best options available today for underwater homeowners is a refinance program run through the Federal Housing Administration (the FHA) called the Home Affordable Refinance Program, or HARP.
The Home Affordable Refinance Program, or HARP, is a federal program set up by the Federal Housing Authority in 2009 in order to help home owners who are underwater or near-underwater on their homes to refinance their mortgages. Refinancing your mortgage can often result in a lower mortgage interest rate and/or lower monthly payments, helping home owners who may be struggling to pay off homes that they have little to no equity in, despite making their monthly mortgage payments on time.
In order to qualify for a HARP refi, your mortgage loan must be either owned or guaranteed by either Fannie Mae or Freddie Mac and your mortgage must have originated on or after May 31, 2009. If you are unsure whether your mortgage loan is owned or guaranteed by Fannie Mae or Freddie Mac, an experienced HARP mortgage lender will be able to help you.
Stay in your home for several more years until you build equity
If you are in your forever home, there is a bit less stress with being underwater on your mortgage, because you have more time to build equity. Markets change over time, real estate prices generally rise over long periods of time. If you love your home and neighborhood, being underwater today may not be that big of a deal in the long term.
Have your home reappraised
If your current home appraisal is near to how much you currently owe (for example: you owe $300,000 and your home has been appraised at $275,000), you may want to consider having your home reappraised to see if the appraisal value may have increased since you purchased. Some factors to consider when thinking about ordering an appraisal include: how old is the current appraisal on your home? Have you made substantial improvements to your home that are likely to increase the value? Have homes similar to yours in your neighborhood recently sold for more than your appraised value? If yes to one or any of these questions, it might be time to have your home reappraised.