Harp 2.0 is getting a lot of buzz. As a matter of fact, it’s getting so much more buzz than the original HARP program, that both the industry masses AND the general public are buying into the hype that it is going to “save our housing”.
Look, I’m a mortgage lender in Arizona. I earn a living, for my family, by originating home loans. I don’t make money by turning away possible mortgage loan business. But, with HARP (in any flavor) I’m not at all convinced that this is the solution for the large amount of underwater homeowners. There are a few points that continue to come to mind when I consider HARP as a solution to an underwater homeowner.
- Without a principal reduction, what is the true benefit to a lower rate? This, of course, depends on the severity of negative equity. In my state of Arizona, it is still not uncommon for a homeowner to be $200,000 upside down. With a conservative outlook on appreciation, it could still take many years to break even. What happens if you have a life changing event 2, 3, or even 5 years, after a HARP refinance, that forces you to sell your house? You’re still upside down. By a lot, likely.
- In my experiences and interactions, I see many people that want to keep their home. …but not at the cost of sanity and stress.
- In addition to the above, a large majority of homeowners want to lose the feeling of this financial monkey on their back. If the debt isn’t lowered, to near market value. Then a lower rate with a HARP refinance just means a lower to slightly lower payment on a house that you are still upside down in.
- If people are faced with these tough choices of refinancing a negative debt, or getting rid of the property, the common desire of any of the outcomes is the fastest possibility of buying again.
In the past few years, I have generally been negative to short sales. This is because every short sale can go different. It’s a renegotiation of a contract, and if handled by an inexperienced person, it could end badly for the homeowner. But, the one element of a short sale mentioned above has completely changed my feelings towards short sales.
YOU MUST talk to a professional about your specific circumstances, and if you decide that a short sale is in your best interest… YOU MUST connect with a REALTOR that is highly proficient in the process of a short sale.
I’d be willing to bet that you could even find one of those guys somewhere inside these pages.
Don’t ask me, I’m just a lender.
If HARP seems good for you, let me know.