Helpful Mortgage And Real Estate Advice

Refinancing Even With High Negative Equity

By on September 3, 2014 in Mortgage Programs, Uncategorized

The United States government wanted a way to jump-start the real estate and national economies with a burgeoning program for nearly all homeowners. HARP, or Home Affordable Refinance Program, allows you to refinance your home while underwater with your lender.


Potential Savings

On average, one underwater mortgage can save around 33 percent on each monthly payment. For example, a $1,000 a month mortgage decreases to only $670 each month. This substantial savings is created with a refinanced loan. The bank looks at your principal, interest and loan term. They may reduce the interest, cut the principal or lengthen the term. There could be a mixture of all these strategies. Each loan is unique and is treated as such. The goal is to have a comfortable monthly payment based on your income and property value.

Having to refinance may not be as much work as making a new purchase on a home, but it is still a bit of a process, that is why Mortgage Home Base can lead you to the right HARP lender that can assist you through it all.


Perks of Refinancing with HARP

There used to be a limit on your loan-to-value ratio to qualify for HARP. Many homeowners were shut out of the program because their LTV was upwards of 125 or 130 percent. The updated HARP program allows homeowners to have an unlimited LTV, giving everyone a chance to refinance at a reasonable rate. Another major perk to HARP refinancing is the lack of private mortgage insurance. Because of the high LTV, many traditional lenders require PMI to protect their investment in you. If the mortgage defaults, the bank has protection from the financial burden. No PMI for you reduces the monthly payment considerably, making it easier to pay and less likely to be defaulted.

As of June 2014, according to the most recent FHFA report, among all deeply underwater borrowers refinanced who took advantage of HARP, 9 percent of the loans had an LTV greater than 125 percent as shown below in the chart.

harp volume by ltv

Starting Your Journey

It’s always smart to start your HARP refinance with your original lender. They have all your information and history handy to streamline a new loan. However, they may not have the best deal for you. To cover all your bases, seek out other loan quotes to compare all the details, including principal, interest and loan term length alterations. Competition for your business only makes the new loan better for you and your checking account.

Procrastination Doesn’t Pay Off

HARP began in 2009, but it’s not a permanent government program. It’s supposed to stop processing applications at the end of 2015. It’s best to start your application now to start the process. It may take a few months for the loan to be approved and signed into use, but it’s worth the time. Once 2016 arrives, you don’t have any recourse for an underwater loan. Act now so you can start a new monthly payment as soon as possible.

Need help determining your HARP refinance eligibility status? Click HERE to get the help you are looking for!



There was initially a more strict HARP program when it began in 2009, but today’s HARP 2.0 program applies to many more homeowners. Check with your lender if you qualify for any of these benefits. Adding more equity to the home with a modified loan is the best way to secure your family’s financial health.

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About the Author

About the Author: Jessica Lucas is the managing editor for Mortgage Home Base, a top real estate finance blog dedicated to helping borrowers and home buyers understand the home loan process. Follow Jessica on Google +, and share your comments here. .
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