What is HARP and is it right for you?

By reading this, you are possibly one in each of the heaps of accountable homeowners who pay their loan on time every month, but are still “upside-down”. This means that you owe even more than your home is worth. And you’ve got heard of human beings refinancing their homes to shop money, however, their financial institution says they can not refinance their houses. We have heard this story many times since the contraction of the real estate market in 2008 and 2009.

 To help homeowners like you, the Federal Housing Finance Agency (FHFA) has put in place a program that allows you to take advantage of historically low-interest rates and save hundreds (if not thousands) of dollars a year on your property mortgage without having to pay. especially for the bank. The Affordable Housing Refinancing Program (HARP) is one of the few financial bailout programs. To understand why HARP is a great choice for some homeowners, we will further explain in detail what HARP is, who is qualified to benefit from it, and the benefits of this program.

Why should you consider refinancing with HARP? 

Let’s say that when you bought your house, it was worth $300,000? He made a down payment of $ 30,000 and started paying a mortgage of $280,000 per month with an interest rate of around 6%. It was a good course at the time, but the Great Recession arrived and housing prices fell. As a result, your $300,000 home you owe $280,000 is worth $230,000. Without your guilt, you are now upside down on your mortgage. Mortgage lenders also call this situation “underwater”. Nothing you did got you there, but it did.

Now your bank is offering an even lower interest rate on your mortgage of 4%. Your monthly payment would drop considerably and you could pay off your mortgage much faster! But the bank does not allow you to refinance at this lower interest rate unless you tell the difference between the value of your home today and the amount you currently owe, which is more than the US $60,000.

This is where HARP comes in. Qualified homeowners can refinance their homes to take advantage of historically low-interest rates without having to compensate for the difference between the current value of their home and the bad value. As a result, homeowners who have their mortgages underwater but make their payments on time can save tens of thousands of dollars over the life of their mortgage.


What are your options in case your mortgage is underwater?

Being underwater in your home is scary. You may feel overwhelmed, but believe us, this is not the end of your financial history! You still have options to make a difference! We will review some of the most common scenarios and find out which options are best for you.

 1: Stay at home and work to create more equity.

Staying at home and paying slowly takes a lot of patience and discipline. We will not soften it! You may need to take up another job or help yourself increase your income. This can mean cutting your budget to the basics and spending all of your extra income on your home. But here’s the big part. Once you have paid more of your capital, you will see the light at the end of the tunnel. And you will not lose your home. They could have given up and stopped paying, but they loved their house and decided to dig. After paying off all their consumers’ debts to free up their income, they invested more and more money in their mortgage.

Thanks to their hard work, they had enough capital in their house to refinance themselves a few years later. They opted for a 15-year fixed-rate mortgage with a payment they could really afford and which did not fluctuate as interest rates went up and down. With affordable mortgage payments and equity in your home, you’re well on your way to building wealth and leaving an inheritance for your family! 

 2: Refinance your mortgage.

OK, let’s be clear about this: you can’t really refinance your home if you owe more than it’s worth. Most lenders do not allow traditional refinancing until you have at least 20% equity in your home. However, if you are underwater at home, you can qualify for the HARP program. This program was created in response to the 2008 real estate crisis and gives you the opportunity to refinance yourself if you are upside down in your home. To be eligible, you must have made your mortgage payments on time in the past six months (and no more than one late payment in the past 12 months). This also only applies to owners with loans taken out before March 21, 2009, and holding less than 20% of the capital. If you are interested in this option, you should seek advice from a trusted lender. 

 3: Sell your home and use your savings to pay the amount you still owe.

The first two options, where you pay more for your mortgage or plan to refinance, are supposed to stay in your home. And just to repeat, it’s your best option if you’re underwater. If you stick to it, you can take advantage of market conditions that improve and increase the value of your home. It can be a crazy race, but you don’t really lose money. But there are other scenarios, and one is to sell your house. If you sell now when your home is low in value, you will lose money. The only way to sell your house underwater through a normal sales process is to have the money to make up the difference between what you owe and the value of your house.

4: Sell your home through a short sale process.

A short sale is only an option if you can’t afford your monthly mortgage payments, your home is worth less than your current mortgage balance, and you don’t have the money to make a difference. In a short sale process, the lender must agree to sell your home for less than you owe him. This is not a great situation for them (as they are losing money), so they will only consider this option as a last resort before foreclosure.

If you want to sell your home through a short sale process, you need to show your lender that you cannot afford your monthly payments and that you have no way of making up for it. 

5: Foreclosure at your home.

In a foreclosure situation, the lender takes control of your home because you cannot make your payments. If you still live in your house, you will be evicted. Then the lender will sell the house as soon as possible to try to get as much money as possible. You don’t want to go there! Do your best to avoid foreclosure. You don’t want to feel the emotional stress of violently losing your home. In addition, you usually have to wait seven years before getting another mortgage. If you can’t buy your house, foreclosure should really be the last option after trying everything.


What is an underwater mortgage?

If you are underwater with your mortgage, it means you owe more for your home than it is worth. It is not a situation in which an owner wishes to be, but it happens to more people than you think! If you owe more in your home than it is currently worth, it is easy to feel overwhelmed and stressed. It’s perfectly normal. Just know that there are millions of Americans who have been where you are and who have overcome it. You have options and we will show you the ones we recommend. Here’s everything you need to know about underwater mortgages: what is an underwater mortgage, how do you know if you have one, and what you can do about it?

What is an underwater mortgage?

First, an underwater mortgage is a home loan greater than the current value of the property. It really is that simple. Suppose you bought your house two years ago and owe $300,000 on your mortgage. Everything was fine until the value of homes in your area began to decline. Now his house (where he still owes $300,000) is only worth $285,000.

Your mortgage value is $25,000 more than the value of your home. Because you owe more than your home, your mortgage is considered “underwater.” Sometimes you hear the term “upside-down” to describe an underwater mortgage. 

An underwater mortgage is a mortgage loan greater than the current value of the property. Sometimes you hear the term “backward”.

Underwater mortgages became very common after the 2008 housing crisis when property values ​​plummeted and owners of floating-rate mortgages could no longer pay their payments. A decade later, more than 9% of owners are still underwater. It’s much better than it was years ago, but 9% of owners think it’s 4.5 million Americans.

How To Know If You Are Underwater At Home

It is not difficult to know if you have an underwater mortgage. Now take a deep breath and follow these simple steps to determine how much amount you still owe on your mortgage. You can find it in a current mortgage summary or in your online account. If you can’t find it, you can always get this information from the company that owns your mortgage. Find out how much your home is worth. There are many ways to determine the value of your home, but some are more specific than others. If you just want a quote, you can speak to an experienced real estate agent near you. For a more precise number, it is preferable to hire an appraiser.

When and how a personal loan can be refinanced?

Taking a personal loan to consolidate your debts or paying higher fees can help you with your finances and free yourself from your debts. However, once you have received a personal loan and made the required payments on time, you can start thinking about refinancing the loan. Is it possible to refinance your personal loan to get a lower interest rate? And is it worth it?

Yes, refinancing a personal loan is not only possible, but it can also be a good idea. It makes sense that your creditworthiness improves to a level where you are offered a rate cut sufficient to offset the cost of borrowing.

When does it make sense to refinance a personal loan?

Your credit rating is better: One of the best ways to get a lower interest rate on your personal loan is to improve your credit rating. If your score has increased since your first loan application, this could be a good reason to refinance.

You want to change your rate type: a variable annual interest rate for a personal loan makes planning your monthly payments more difficult. Additionally, you may see an upward trend that will cost you more. Refinancing allows you to switch from a variable to a fixed interest rate in order to receive constant payments each month.

You want to avoid balloon payments: some personal loans may involve balloon payments, so you have to make a payment much higher than the normal monthly amount. You can refinance in advance to avoid this type of personal loan.

How to Refinance a Personal Loan

1. Calculate the amount you need.

What does refinancing a loan mean? In short, you always repay the existing loan with a new loan on different terms. Before buying offers, find out the exact amount to pay off your current loan. You can find this information by logging into your account or by calling your lender directly. Also, ask if there are prepayment penalties that could outweigh the benefits of refinancing.

2. Check your creditworthiness and indicate if your loan is sufficient for a low-interest rate.

Before you consider refinancing your loan, you need to know if you are entitled to an interest rate lower than the one currently paid. If the new interest rate is not significantly lower, it may not be worth refinancing. Also, check to see if lenders are flexible or difficult to quote an offer. Alternatively, you can check your own creditworthiness to find out if it has improved or not.

3. Buy prices and conditions from banks and lenders online.

Research is essential when you need to refinance personal loans. It is worth seeing what the different online banks and lenders like ExpressCash.com are offering and what their requirements are. A new loan with a lower interest rate is not necessarily better if you pay it off longer.

One problem with refinancing is the temptation to extend the term of the new loan beyond the term of the current loan. Even if you get a lower interest rate, you can pay more in total interest charges. Take out a calculator and calculate the prices offered. What is your total payment at the end of the loan?

4. Ask the lender if the question of the interest rate on the loan affects your creditworthiness.

With peer-to-peer lenders, you can research loan interest without compromising your creditworthiness until the closing of the new loan. However, once you close a new loan, it can affect your credit rating. It is usually five to ten points. The drop in your credit score is temporary, it only takes a year. The request itself will appear in your credit report for two years, but will not affect your score all the time.

5. Compare the refinancing rates

Finally, compare the refinancing rates and take notes on each rate shown. Create a quick chart to compare key features and interest rates. Then use your chart, your research, and your conversations with the lender to decide what works best for you.


What is private mortgage insurance (PMI)?

You have already researched, observed the real estate market and now is the time to bet on your perfect home. As you go through the final stages of the mortgage approval process, you (and most other homebuyers) will likely find a new term: private mortgage insurance or PMI. Let’s take a look at PMI, how it works, how much it costs and how to avoid it.

What is private mortgage insurance (PMI)?

Private mortgage insurance (PMI) is insurance coverage that homeowners must have if they pay less than 20% of the cost of the home. Basically, PMI offers mortgage lenders a backup when a home is foreclosed because the homeowner has not been able to make their monthly mortgage payments.

Most banks don’t lose money, so they did the math and found that if they were foreclosed, they could recover about 80% of the value of a house if the buyer fell behind and the bank had to confiscate the house. To protect themselves, banks ask buyers to pay an insurance policy, the PMI, to compensate for the remaining 20%.

How does PMI work?

The PMI is a monthly insurance payment that you make when you deposit less than 20% at your home. It is not an optional form of mortgage insurance, like some other mortgage insurance plans that you may have seen. Here’s how it works:

Once the PMI is required, your mortgage lender will do it through their own insurers.

At the start of the mortgage process, you will be told how many PMI payments you will need to make and for how long, and will pay them monthly in addition to your mortgage principal, interest, and other fees.

You will stop paying the PMI the day your lender calculates that the principal amount of your mortgage will reach 78% of the original appraised value of your home. After that, the PMI stops and your monthly mortgage payment goes down.

The PMI does not in any way cover your ability to pay your mortgage. It protects the bank because they give you more than 80% of the sale price! Once you have to pay the PMI, you will no longer be able to pay these insurance premiums to the bank, whether or not you comply with them and go into foreclosure.

How to get rid of PMI

Now the good news! There are a few things you can do to say goodbye to PMI.

1. Pay extra for your mortgage each month

You could overpay your mortgage each month and get to the point where you owe 80% or less. However, this could be quite complicated since you will have to find extra money each month.

Take our example above and pretend you could pay an extra $25,000 in a few years. Why not wait to buy the house and save about a year? Then you could buy the dream home for $250,000, make a 20% deposit and completely avoid the PMI!

2. Get a new home appraisal

Keep an eye on the value of your home If you end up having more value than last year (for example, because more people are moving to the area), it means more justice on your behalf. Ask your lender for a new appraisal if you think that the value of your home has increased so much that your capital increases by more than 20%. As long as you owe less than 80% of the new assessment, you can write to your mortgage lender and request that the PMI be terminated.2 However, it is up to you to pay for the new assessment and follow the appropriate steps if you request the lender to do it. finish early.

If you let your house be evaluated after a few years and pay a little more for your mortgage payments each month, you can reach this magic 80/20 threshold much faster and that means big savings!


How to pay your mortgage early

Every dollar you add to your regular payment each month dramatically reduces your principal balance and you don’t have to double it to make a difference. Adding just one additional payment each year will take years out of your mortgage!

Here are some other options for paying more on your mortgage, and how these additional payments affect a $220,000, 30-year mortgage with a 4% interest rate:

1. Make an additional quarterly payment for the house

You will pay off your mortgage 11 years earlier and save more than $65,000 in interest.

2. Bring your lunch to work

If you bring a brown bag to work every day, you won’t win a fashion contest. However, if you trade lunch for groceries, you can become a thin, mortgage-free machine three years earlier than expected. Applying your mortgage of $100 a month on your lunch mortgage also saves you over $28,000 in interest.

Other small victims can make a big contribution to the prepayment of your mortgage. Let Andrew Jackson work for you by adding only $20 to your mortgage payment each month. Based on our sample mortgage numbers above, pay off your mortgage a year earlier and save over $7,000.

How much could you save if you took your money from Starbucks and added it to your mortgage payment each month? According to the Acorns Money Matters report, the average American spends $3 a day on coffee. It’s about $90 a month added to your mortgage payments, which saves you $25,000 in interest and four years of the loan!

3. Refinance or pretend you did

The only type of debt Dave doesn’t shout at you is a 15-year fixed-rate mortgage with a payment that cannot exceed 25% of his net salary. You pay much more interest on a 30-year mortgage, and who wants to borrow for 30 years?

You can refinance a longer-term mortgage on a 15-year loan. If you already have a low-interest rate, you save the cost of refinancing and pay off your 30-year mortgage like a 15-year mortgage. The same goes for a 15-year mortgage. If you can change it, why not increase your payments to pay for it in 10 years?

4. Reduce the size

Reducing the size of your home could be a radical step. However, if you are determined to get rid of your mortgage, consider selling your larger home and using the proceeds to buy a smaller, cheaper home.

You may be able to use the proceeds from the sale of your larger home to pay cash for your new home. But even if you have to take out a small mortgage, you have managed to reduce your debt. Now his goal is to get rid of this debt as soon as possible. The smaller the balance, the faster you can do it.

We all know that 20/20 is in retrospect, but if you use the tips below before buying your next home, you’re in an excellent position to pay off that mortgage sooner.

5. Don’t bite more than you can chew

Before looking for houses or finding a real estate agent, you need to make sure that you are ready financially and that you can afford the house you want to buy. However, this handy checklist can be a good place to start. If you cannot answer yes to the six questions, you must suspend the purchase of your home.

  • Will I be debt-free if I spend three to six months in an emergency fund?
  • Can I make a deposit of at least 10% (preferably 20%)?
  • Do I have enough money to cover closing and relocation costs?
  • Is the house payment 25% or less of my monthly takeout payment?
  • Can I Afford a 15-Year Fixed-Rate Loan?
  • Can I pay for the ongoing maintenance and supply of this home?

If you need help determining the amount of your home, our free mortgage calculator is a great place to learn more and see what your maximum payment should be.

6. Contact a professional to find the right home

If you are looking to buy a home that fits your budget, or are ready to sell your home, contact an experienced real estate agent whose advice will save you time and money.

A buyer can help you navigate the home buying process. In some cases, they can even help you find housing before it goes on the market and give you a competitive advantage. And when it comes to offers, your agent will negotiate on your behalf so you don’t pay a cent more than you need to.

Dave’s network of local licensed providers allows you to find a trusted real estate professional in your area. Our ELPs know how important it is for you to buy a home you can afford. You can, therefore, be sure that your ELP will not put you under pressure to consider houses that would ruin your budget. Contact your agent today!


How Technology is changing the real estate industry

Whether you want to buy or rent a home or are an agent trying to sell one, it is now normal to prepare to surf on your phone or tablet. However, this is just the tip of a giant iceberg hitting the real estate world as technology continues to play an important role in bringing consumers and professionals closer to the market.

Residential and commercial real estate offers many opportunities to use the latest real estate technologies and increase the country’s largest fortune with an estimated value of $40 billion. Here are five ways technology is changing the industry:

1. Online offers

Websites make it easy for everyone to view inventory and see what’s available. In addition to photos and detailed property descriptions, you will find purchase and tax history, school grades and other information about the neighborhood. Would you like a satellite view to see how far you can be from a highway or shopping center? You have it

2. Mobile applications

All of these websites also have apps, technologies that keep you up to date without having to do anything. You will receive notifications of new properties and offers that match your search criteria. Plus, apps can help you with your budget and quick access to real estate agents and managers.

3. 3D virtual tours

In addition to photos, the new software allows buyers and sellers to take a 3D virtual tour of a residential or commercial property, giving them the feeling that they are personally walking in space.

4. Online investment

Real estate investments take as reference to the popularity of crowdsourcing. The mission of certain new sites is to give everyone the opportunity to invest in quality real estate by pooling their online resources.

5. Electronic signature services

New platforms are made available to complete real estate transactions with several parties, save time and stay organized. From legal and secure electronic signatures to personal task lists and simple file sharing, this type of technology not only improves efficiency but also the way agents respond to their customers.


Homeownership is more than just real estate

Homeownership is part of the “American dream” and people will always strive to achieve this goal. For most of us, buying a home is an investment in your future, but not only financially. In your home, you will create family memories for life and be part of the community. In the future, it is wise to take steps to better prepare for homeownership long before you are ready to bid.

Early savings

Your down payment plays a role in the type of loan to which you are entitled. Even if the loans are only available with a 3.5% discount, it is better to aim for a 10-20% discount and remember that you have an extra 2-5% of the closing cost of the House.

Home loan

Your credit rating also plays an important role in qualifying for a mortgage. If you check your credit report early, you have enough time to improve it. Scores range from 300 to 850; A higher score generally makes it easier to get a loan with the lowest interest rate. If you pay off debts, pay your bills on time, keep credit card balances low and don’t open new lines of credit, you can improve your score.

Use an agent

Ask your family and friends for their recommendations. It is important to choose a real estate agent with whom you are comfortable because you will spend a lot of time with him. A real estate agent can suggest that lenders guide you through the mortgage application and closing process and explain the documents you need to present, as well as the credit options and estimated cost.

Be realistic

Based on your conversations with your lender and the help of an agent, select neighborhoods that suit your budget and your needs, such as B. Schools, places of worship, parks and nearby commuters. An agent can show you homes that meet these requirements.

It is also important to remember that in today’s highly competitive market, your offer may not be the only one from which the seller must choose. An agent can offer you comparable sales of similar homes in the area. Your offer must correspond to these selling prices.


4 important things to consider before buying your first home

Achieving the American dream of homeownership is an important step in life, but the process can be daunting. Before looking for a home, you should research a mortgage. There are a variety of options and your lender can help you determine the type of financing that is right for you. There are a few things to consider before you start.

1. Understand your budget

Remember that your monthly payment includes not only policies and interest, but also insurance and taxes. And remember that in addition to the initial payment, most people have significant closing costs.

2. Understand the process

Talk to people who recently bought a house and ask them what they have experienced. Talk to your lender about the process and schedule so that you are ready to bid on a home. Lenders will tell you what to expect after you bid for a home.

3. Talk to multiple lenders

Receive recommendations from friends and your real estate agent. Find out about the various mortgage products they offer, especially for first-time homebuyers, such as FHA loans and other types of down payment loans. Choose a responsive and helpful lender.

4. Help your lender work for you

As soon as you make a house offer, you work with a deadline: the closing or billing date. There will be many necessary forms and documents in advance. Make sure your lender guides you through the process to stay on track. Much of the closing process can be done online or even on your smartphone. A good lender like ExpressMortgageQuotes.com will do everything to make everything work.

If you understand the process before looking for a home, you will move to your new home before you know it.


5 most effective tips to minimize stress in the mortgage process

Buying a home is one of the most important financial decisions many will make in their lives. However, before you start looking for homes, you may need to first explore the mortgage market. There are many things to consider when considering possible mortgages, and choosing a mortgage is not an easy task. Before buying a home, consider these five things to consider when buying a home.

1. Know your budget

Consider not only the price of the mortgage but also insurance, taxes, maintenance, utilities, etc. Calculate an affordable monthly payment, then calculate the corresponding housing price.

2. Plan the unexpected

Look at yourself unexpectedly and accidentally. Unlike rental, if you can call the owner to fix a broken unit, you are responsible for everything that needs to be fixed. Although you cannot plan for an accident, you must save money to prepare for the inevitable.

3. Learn the process

Talk to lenders, agents, and borrowers to get a better understanding of how mortgages work. Having someone you know and trust to answer questions can make a big difference and help make the process less intimidating.


4. Compare the prices

Find out when you choose a mortgage and talk to several lenders. Not everyone offers you the same price. Make sure you understand the interest rate, fees, terms, and whether it is a variable or fixed-rate mortgage. Ask other clients about the lender’s ability to close on time and how long it takes to process a loan.

5. Know your lender

Find out how your lender works. Familiarize yourself with your process online or on paper and make sure it works for you. Navigating the mortgage buying process can seem overwhelming and full of uncertainty and stress. However, with a little research and care, you are about to move into your new home.