new harp opportunities

New Report by Freddie Mac Shows Promise for Mortgage Refinance

new harp opportunitiesA new report by Freddie Mac showed that borrowers will save more than $1 billion over the coming year.

These borrowers were able to save money and often shorten their payment terms. In fact, of the borrowers who refinanced during the second quarter, 40% of them of them were able to shorten the duration of their loans. Now is an excellent time to consider saving money on a home loan and potentially shorten the duration of your loan at the same time.

Frank Nothaft, Freddie Mac VP and chief economist, had this to say. “The housing market realized a significant shift in the second quarter of this year as refinance activity fell below 50 percent marking the onset of the first purchase-dominated market the industry has seen since 2000 and an end to the refinance boom that started in late 2008. In this time we saw fixed mortgage rates hit all-time lows, with the 30-year fixed-rate mortgage falling well below 4 percent. We also estimate over 25 million American borrowers refinanced their loans to the tune of over $70 billion in total interest payment savings.”

What People Are Doing With Their Home Mortgages

A substantial portion of the refinancing from these mortgages came from cash out refinancing. It has been estimated that around $7.8 billion dollars in home equity was cashed out during the second quarter of 2014.

One of the reasons that this is happening is that people are building more and more equity in the homes as the economy and housing market improve. Overall, the United States economy grew by 4.1 trillion over the last two years.

How People Are Saving Through Refinancing

On average homeowners have been getting their interest rate reduced by 1.4% points. Over time this translates into roughly a 24% savings in interest payments over the life of a loan. Those who choose to refinance through HARP were able to save on average 1.6% off of their current loan. For the average borrower this translates into a savings of about 3,200 in interest payments during the first year.

If you took out a home loan before 2008 then there is a very good chance that you could potentially save quite a bit of money through strategic refinancing. Of course, in order to benefit from refinancing programs like HARP you must first be eligible for them. According to the official HARP website, you need to meet all of the following criteria in order to be able to refinance:

– The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.

– The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009

– The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.

– The current loan-to-value (LTV) ratio must be greater than 80%.

– The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.

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