Are you in a refinancing zone?

Posted by  on Dec 26, 2014

Recent years have seen the lowest mortgage rates ever, so there is a widespread assumption that anybody who could benefit from refinancing has already done so. However, the federal government estimates that there are hundreds of thousands of mortgages that could still potentially benefit from the Home Affordable Refinance Program (HARP).

The government has produced an interactive map which shows where the most potential HARP beneficiaries are. If you are in one of these areas -- think of them as the refinancing zones -- you should take a look at whether you could benefit by refinancing with a HARP loan.

Reviewing HARP

HARP addresses one of the chronic problems that has plagued homeowners since the housing bubble burst in 2006 -- depressed home prices left some mortgage borrowers owing more than their homes are now worth, making them ineligible for refinancing by conventional means. For borrowers with these so-called underwater loans, the low mortgage rates of recent years were meaningless, because they were unable to refinance into those rates.

HARP addressed this problem by allowing some homeowners to refinance even if they owed more than their homes were worth. Some of the chief requirements are as follows:

  • You must be up to date on your loan payments, with no payments over 30 days late in the past six months, and no more than one such late payment in the past year.
  • The home in question must be your primary residence, a single-unit second home, or a 1- to 4-unit investment property.
  • Your loan must be owned by Fannie Mae or Freddie Mac.
  • Your loan must have been originated on or before May 31, 2009.
  • Your remaining loan balance must be at least 80 percent of your property's current value.

The Federal Housing Finance Agency (FHFA) urges homeowners to check on their eligibility even if they have been turned down for a HARP loan in the past, because the requirements have been streamlined since the program was initiated.

Top states for HARP eligibility

How many borrowers meet those criteria? The FHFA estimated that as of mid 2014, there were over 700,000 mortgage loans that would be eligible for HARP and should have a financial incentive to refinance. There are particularly high concentrations of these loans in states where housing values have been slow to recover.

Here are the top five potential HARP refinancing zones -- the states where the FHFA estimates there are the most loans that could benefit from HARP refinancing:

  1. Florida -- 97,318 loans
  2. Michigan -- 54,965 loans
  3. Illinois -- 52,194 loans
  4. Georgia -- 50,847 loans
  5. Ohio -- 48,541 loans

Anyone who has not been able to refinance due to an underwater loan should consider the HARP program; but in particular, people in these potentially heavy refinancing zones should be encouraged to look into it.

Depressed home prices have left many mortgage borrowers on the outside looking in at the best mortgage rates in history. HARP is a key that can open up the opportunity to refinance for many homeowners, but that key will not be available forever. With HARP scheduled to expire at the end of 2015, underwater borrowers should not delay checking up on their ability to refinance through this program.


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