Even If You’re Not Eligible For HARP 2.0 You Still Have Refinance Options
Interest rates have touched all times lows again which makes refinancing a hot topic. If you plan on staying in your current home for at least 4-5 years, you may fall into one these categories below:
1 – You are NOT HARP 2.0 eligible.
HARP (Making Home Affordable Refinance Program) is a government program aimed to help borrowers refinance into today’s low interest rates. Yet there are certain criteria that may not make you eligible for the program.
You may be one of the people that do not have a Fannie Mae or Freddie Mac backed mortgage or you may have already used your onetime access to HARP 2.0.
Housing values have finally turned positive and you may have options under the traditional refinance parameters. Although most people are adverse to paying PMI, in many situations paying PMI on a shorter term loan can save thousands of dollars and PMI may only be a factor for a couple years.
Moral of the story here is if you currently have a mortgage rate in the 4.5% range or higher, you must take the time to review the options.
There is NO way to wrap the two loans together without a large amount of equity. Yet there still are viable strategies on refinancing your primary mortgage.
You can refinance and stretch the term of the first mortgage back to 30 years to free up cash flow to pay much more aggressively toward the 2nd mortgage to make it go away as fast as possible.
If you believe this will not work for your household and the money may go other places, then simply commit to a shorter term mortgage to gain equity much faster and look into refinancing the two loans together at a later point in time.
3 – You enjoy actively managing your finances including the mortgage.
Intermediate adjustable rate mortgages (ARMs) are below 3% for 5 yr and 7 yr terms. The benefits are the incredibly low rate and the payment flexibility. If you pay aggressively the balance outstanding upon the rate adjustment will be modest.
You can also have the option to make the minimum payment for a period of time if that money is better served put into savings of some sort. Again, ARMs are only for those that are actively managing their finances.