A fix for underwater homeowners who otherwise might have made a move up by now is hopefully on its way, at least if the Obama administration has anything to do with it. HARP – or Home Affordable Refinance Program – aims to avert foreclosures and allow homeowners who are still current on their mortgages to refinance no matter how much their home value has dropped below what they still owe. Obama announced on Monday, October 24th, that he will attempt an executive branch rescue of these underwater homeowners. This initiative allows these homeowners to take advantage of today’s historically low interest rates.
Imagine you bought your house 5 years ago…you can still afford the home, but you know it’s worth about $20%, or maybe more, less than when you bought it. These great interest rates are out there, but the bank won’t let you take advantage of them because your loan-to-value (LTV) ratios are off. This is why many homeowners ‘strategically’ let the bank foreclose on their property. They would rather walk away then pay the high interest rate on a home that is not worth it. The government is specifically targeting these homeowners.
Now these homeowners might actually be able to stay in the house longer and not need to sell short or even worse, let the house go back to the bank. These are the homeowners who are potential ‘move-up’ buyers in the very near future. This will eventually help spur the market in the future. For more information on this program, click here and read the story by DSNews.