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Many homeowners that have purchased their homes and have been paying their mortgage down payment after payment are unsure if they should refinance back to a 30 year mortgage. With the goal of someday retiring, starting up another 30 year mortgage may not be an option for your financial plan therefore you should look at a 15 year HARP refinance.
Refinancing your mortgage to a reduced term will save you thousands of dollars in interest not only due to a lower interest rate, but also because you will be through with your payments much faster. It is the goal of most homeowner to be debt free and pay off their mortgage. Reducing your term on a refinance can be a key step in your plan.
Benefits of a 15 year HARP loan
There are several benefits to refinancing to a 15 year mortgage through the HARP program. As previously discussed, if your reduce your loan term you will save several years of interest. Secondly, the shorter the term, the lower the interest rates will be. Lenders have less risk as you agressively pay down your principal balance which allows them to offer more attractive financing rates. Lastly, with a shorter term, you will build equity quickly. Should you sell your home after a few years you will have more money in your pocket as compared with a 30 year loan term.
HARP 2.0 now allows for mortgage lenders to transfer your mortgage insurance to a new loan at a lower rate. If you did not put down a 20% downpayment when you purchased your home then chances are you have PMI. Unfortunately you cannot get rid of PMI through the HARP program however you can still take advantage of lower rates without having that 20% equity.
Many of our clients also have 2nd mortgages which may be preventing them from refinancing their 1st mortgage to lower rates. With new HARP guidelines, we are able to subordinate your 2nd mortgages and complete the refinance. On a 30 year mortgage there is no combined loan to value (CLTV) however on a 15 year loan HARP guidelines limit the combination of your 2 mortgages to 105% of your home’s value.
If you think you may benefit from a 15 year HARP refinance and would like to get more information complete the form below or call a loan officer today at 1-800-555-2098. We will be glad to give you a free 15 year loan quote.