Is your mortgage underwater, meaning the market value of your home is less than the current balances of loans secured on it? If so, you're far from alone.
Data from CoreLogic suggests that in the third quarter of 2014, 5.1 million home loans were still underwater. And an additional 9.4 million were only just above water and unlikely to qualify for traditional refinancing.
HARP Here to Help
The problem with being unable to refinance is that homeowners are locked out from today's ultra-low mortgage refinance rates. Instead, they're stuck with older, higher ones. Mortgage rates at the start of 2015 are at least 30 percent lower than they were in 2008, so there's money to be saved if you can refinance.
This is where the federal government's Home Affordable Refinance Program (HARP program) comes in. It can help many whose loans are underwater or only just above water to go ahead and refinance.
The amount you can save through the program is going to vary depending on individual circumstances. Official figures show the average sum saved by HARP participants in the second quarter of 2014 was $179 a month.
That's $2,148 a year, or over the lifetime of a 30-year fixed-rate mortgage, $64,440. And that's an average. If your current rate or the balance on your mortgage is higher than most, the savings could be a lot more. In any event, we're talking serious money here.
The sums could be even more significant for those who can comfortably afford to make higher mortgage payments. Refinancing from a 30-year to a 15-year mortgage confers a double benefit -- by shortening the term to 15 years, you'll pay a lot less interest, and by choosing a 15-year term, you'll get a mortgage rate that's between .5 and 1.0 percent lower than that of a 30-year home loan.
Can YOU be a HARPist?
Obviously, homeowners need to meet certain criteria to qualify for a HARP loan. But these tend to be easier than for many forms of borrowing. You might be okay, even if your credit report's pretty shabby, though you must have been current with your mortgage for the six months prior to your application, and to have been late with those payments no more than once in the previous year.
The main stumbling blocks are that your existing mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae, and that one of those organizations must have acquired your loan before May 31, 2009.
However, don't be put off just because your loan appears to come from a different lender and your latest statements are branded with a different company's name. It may have been sold on years ago without you even knowing. Use the loan look-up tools on the Fannie and Freddie websites to see whether your loan is eligible.
Sweeter Music on the Way?
If your mortgage is still underwater, you're entitled to feel sore. The homeownership dream turned sour for you. However, things are getting better, and 273,000 loans broke the surface of the water in the third quarter of 2013 alone, according to CoreLogic.
However, by the time yours joins them, mortgage rates could be on the rise again. HARP might just help restore your faith in owning your home.