5 On Your Side

'Almost too good to be true' program lowers mortgage payments

Posted July 19, 2012
Updated July 20, 2012

— Homeowner Chandra Rigda says her 2,400-square-foot house on a cul-de-sac is great, but "it's just a matter of making it more affordable." Rigda has spent the past several years trying, and failing, to refinance her home mortgage to take advantage of low interest rates. 

"Watching rates drop, (my) gut was just, you know, having all those gut pains knowing that everybody else was paying less than we are," she said.

Rigda called lender after lender, more than a dozen times, and the conversations were always similar. After asking the lenders to help her, they said, "Nope, you've got PMI (private mortgage insurance). Nope, you're underwater (and owe more than your home is worth)," she recalled.

Rigda's mortgage was about $250,000, but the current market value of her home is about $203,000. The family finally got a break when a friend told them about a little-known federal program called the Home Affordable Refinance Program, or HARP.

"(I) made the call, and as soon as he said yes, he could do something, I almost fell on the floor from relief," Rigda said with a laugh.

The federal government created HARP and recently revamped it to make more people eligible. It's designed to help those who have done everything right, including paying their mortgage on time, but just can't get a lender to refinance because they owe more on their home than it is worth.

Brian Grubbs owns Raleigh Mortgage Group and says, unlike traditional refinancing options, HARP does not require an appraisal.

Program helps lower mortgage payments Program helps lower mortgage payments

"The major obstacle we're having right now is appraised value. If this program didn't exist, probably nearly 30 percent of the customers that I have in process right now, I wouldn't be able to help, " Grubbs said, adding that his office is the busiest it has ever been. "(The program) seems almost too good to be true. It really does."

Grubbs says HARP loosens the reins. In addition to no appraisal, homeowners can finance more than their home is worth, so it doesn't matter if the value of their home has dropped way below what they paid. Also, there's more flexibility regarding debts in relation to income. Homeowners can even use HARP to refinance a second home or an investment property.

"It's just a program for people that have done the right thing and are paying their bills on time but for one reason or another weren't able to refinance," Grubbs said.

As for what's required, a homeowner must have taken out a loan before June 2009, the past six months of payments must be current and the loan has to be backed by either Fannie Mae or Freddie Mac.

"We had no idea all this time that we even had one of those mortgages, had no clue," Rigda said, adding that she can't believe how much she is saving. "(My mortgage) was over $2,000 a month. Now, we're looking at $1,600 a month. (A) $422.50 difference between the old mortgage payment and the current mortgage payment. It's awesome."

Grubbs says homeowners owe it to themselves to figure out how much money they can save. 

To find out if you qualify, contact any mortgage broker and ask if they participate in the HARP 2.0 program.


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  • garnernc Jul 27, 2012

    hopefully she doesn't have Chase for her mortgage company because they will give her the run around for a year and then foreclose.

  • 49battn Jul 25, 2012

    Thank you, howzthat for your comment. I am always amazed at how so many people assume that everyone in need of assistance is irresponsible. (Not all homeowners who are in danger of foreclosure were subprime borrowers in the first place.) People can make perfectly responsible decisions and still end up in dire straits. Job losses, wage cuts, etc. Many people are still doing the "responsible" thing by trying to stay in their homes. As othes have noted, a refi is not a "handout". The owners still owe the full amount on their loan, and they still make payments. If people want rail about people, rail at the wealthy "walkaways" who can very well afford their mortgage but just bail and call it a "strategic default". Or rail at the corporations who got the real "handouts". It is better for everyone in the community if a homeowner stays in their house. They are still making payments and paying property tax. A vacant house in a bad market does no good to anyone.

  • RichardE Jul 25, 2012

    The problem with HARP is that it requires a loan backed by either Fannie Mae or Freddie Mac.

  • NCSU84 Jul 25, 2012

    Seems to be a good program for folks who bought when the market was high, no fault of their own. And who are paying their monthly mortg payment on time. I bought a house last Aug at 4.5% rate and go a good deal on the house comapred to the arket. Only problem is Wake County appraised it at 2008 levels for their tax base..boo hiss..

  • Danny22 Jul 24, 2012

    Whatever happened to starting out in a fixer-upper like my generation did. I'm sorry but I resent giving my tax money to luxury homeowners. My first mortgage was 11% for a fixer upper. Now my tax money is buying homes with 2,000 payments and more for people who were not too smart and did not plan.

  • yankee1 Jul 23, 2012

    $2,000/month mortgage payment? Really? No thought at all given to that decision was there? Just avoid mortgage insurance, right? Why not, the dumb taxpayer will back me up when I crash. Enough already!

  • superman Jul 23, 2012

    I suggest that you use Goggle and find a site where you can do a loan amortization. This will give you an idea as to how little of your payment goes toward the principle for the first 10-15-20 years depending on the length of the loan. You type in the amount of the loan, the number of years and the interest rate. You will be shocked when you see it I guarantee. You will have grandchildren by the time the balance of the loan is close to being the same as the value. It will only get better if and when the value of houses go up again if ever.

  • lbaxter13 Jul 20, 2012

    I work with the HARP program. It is a fantastic program, we used it to refi our own home several months ago.
    Things consumers need to keep in mind is that they could be required to get an appraisal and that is not up to your lender. FNMA and FHLMC determine HARP eligibility and if an appraisal is required or not. You may also need to supply asset documentation if any funds are required to close.
    Most importantly, everyone's loan and financial profile are different. Your neighbor's rate may not be same rate you're quoted for a myriad of reasons, credit, LTV/CLTV etc...
    Your neighbor may not have to have an appraisal and YOU are. All of that is okay, and the program is still a fantastic option for those wanting to avoid mortgage insurance or who are underwater in their loans.

  • superman Jul 20, 2012

    If the loan is 50k more than the value chances are they will never live long enough to pay off the 50k difference. They bought a house that was like buying a car-it was worth less than they paid for it. Is that really my fault or theirs? If they walk away in 5 years the loan will still be more than the value of the house. As for me, my house is paid for, all 3 cars are paid for and I have absolutely no credit card debt. I have a 3 figure savings account. I worked two jobs 60 hours a week for 15 years to achieve this. Even if they get a cheaper loan they should continue to pay waht they were paying and pay off the loan as soon as they can. But with cable tv, a couple new SUV's and 4 or 5 cell phones it is going to be slow and they will never get out of the hole.

  • paradiselost Jul 20, 2012

    One problem is people aren't willing to live within a budget. Make no mistake, some of the folks who are able to take advantage of this program and free up several hundred dollars a month will spend the money instead of save it. I would venture a guess that over 75% of American homeowners have no idea what their debt to income ratio is nor do they have a working monthly budget.