Real Estate

HARP Can Help

By | Home Buying, Homeowner, Real Estate

What would you do if you had an extra $200-$500 or more in your pocket every month? Would it make a difference in your life? Would it transform your financial future? We think most people would say “yes,” and then ask, “But where am I going to get that kind of money?”

Have you heard of the Home Affordable Refinance Program (HARP)? HARP is a government program that came into existence when the real estate market spiraled out of control, leaving many homeowners paying for homes that no longer held the value they once did. HARP is designed to help the “underwater” homeowner – homeowners who are not behind on their mortgage payments but are unable to obtain traditional refinancing, because the value of the home has dropped below what is owed.

But why would a credit blog primarily focused on helping consumers better manage credit cards be talking about HARP?

If you have a mortgage on your home and you are paying more than 3-4 percent APR, you may be throwing money away that you could be using to pay off high-interest credit cards and to get out of debt. Refinancing your home may be the best option, not just to save you money and keep you in your home, but to transform your overall financial condition.

Home mortgage rates have remained low. So if you obtained your loan before the real estate bubble burst, it’s likely that you are paying too much interest on your home loan. If you are current on your payments but have not been able to refinance, to take advantage of the lower interest rates, HARP may be the solution you need.

Recently, there have been changes made to HARP to make it more accessible and more streamlined. There is hope that even more people will now be able to take advantage of the opportunity to refinance at a lower rate, saving $200-$500 or more per month on their monthly house payment.

Even if you have already refinanced, you may want to consider refinancing again if the rates have dropped since that time. The money you save on your house payment by refinancing, whether through HARP or through a more traditional means of refinancing, can often be enough to help you redouble your efforts to pay off credit card debt and change your financial future.

Rates Are Low, But Can You Get a Mortgage?

By | Credit Repair, Credit Reports, Credit Scores, Debt, Fannie Mae, Home Buying, Homeowner, Loan, Mortgage, Real Estate, Your Credit

Mortgage rates are bouncing off of 40 year lows.  Seems like the best time to buy a house or refinance.  Not so fast – there is a catch.  You have to qualify first!

Before the recession, qualifying for a mortgage was not much of an issue.  The overall standards were pretty low.  If you had a low credit score, you could still qualify for financing.  Your credit score did not necessarily determine if you qualified more so than the rate that you qualified for.   People with higher credit scores received lower rates and people with lower credit scores received higher rates.  But just about everyone qualified for something. 

The lending environment today is vastly different.  Only those that meet the highest qualification standards can get financing.  According to the Federal Reserve, about seventy five percent of those that apply for financing are qualifying.  Of course, the number of those applying for loans has decreased significantly. 

According to Fannie Mae and Freddie Mac, the average credit score for loans that they finance has risen to 760.  It was 720 just a few years ago.  For FHA loans, the average score has increased to 700 from 660.

The subprime market has just about disappeared altogether.  Before the recession, subprime lenders routinely made loans to borrowers with credit scores below 620.  Today, it is very difficult to find lenders willing to make these loans. 

If you are thinking about financing, you should check your credit score.  If your score is below some of the qualifying averages, take proactive steps to improve your credit scores.  Remember, about eighty percent of the credit reports contain errors.  With a little bit of effort, you might find that you do qualify for a loan at the current rates after all.

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