Government's HARP - making home refinance easier for some

As a result of the 2007/08 real estate "bottom-out" many people are still dealing with properties where they owe more than the property is worth.  Or, it's pretty close to that scenario.... they have very little equity in the home, with a big mortgage payment that's hard to manage. 

The Goverment has released more details regarding the HARP (Home Affordable Refinance Program) this week.... check out this recent article found in the Real Estate Daily News....

Gov't Announces More Refinancing Program Details

Daily Real Estate News | Thursday, November 17, 2011

This week, the federal government released more details about its revamped Home Affordable Refinance Program, which sets out to allow more home owners to refinance their mortgage and take advantage of ultra-low rates. The program is geared to those who are current on their mortgage but may be underwater, owing more on their homes than they are currently worth.
Here are some more details about the changes coming to HARP:

• Borrowers must be current on their loan and have no delinquencies in the last six months. A borrower can be 30 days late, however, on one payment in months seven to 12 of the past year. Borrowers much have 20 percent or less of equity in their homes to participate. 
• Loans must be owned or guaranteed by Fannie Mae or Freddie Mac before May 31, 2009. Borrowers can see if Fannie Mae or Freddie Mac backs their mortgage by visiting www.freddiemac.com/mymortgage or wwww.fanniemae.com/loanlookup. 
• The revamped HARP program will begin Dec. 1, 2011, and run until Dec. 31, 2013. Participating in the program is voluntary for lenders. 

Source: “Mortgage-Refinancing Program Undergoes Changes,” Chicago Tribune (Nov. 16, 2011)

Wow - Homeowners' mortgage payments are a lot less these days.....

After 4 years of living in this economic housing downturn, there continues to be benefits for those who are in the market for new mortgages.  In the first part of 2006, mortgages represented 23% of a family's income - now the mortgage payment accounts for only 13% of monthly median family income.  Check out this article from the Daily Real Estate News...

Home Owners’ Monthly Mortgage Down About 40%

Daily Real Estate News | Thursday, November 10, 2011

Improving housing affordability mixed with low mortgage rates means that home owners are paying a lot less for their monthly mortgage payment than they did just a few years ago. In fact, they’re paying nearly 40 percent less on their monthly mortgage payment than home owners paid in 2006.
According to Fiserv, the monthly mortgage payment for a median-priced single-family home today is $700 — a drop of close 40 percent from 2006, when it was $1,140 .
“Housing affordability has improved dramatically because of declines in both prices and mortgage interest rates," David Stiff, chief economist at Fiserv, said in a statement. “Nationally, purchase mortgage payments now account for only 13 percent of monthly median family income, the lowest percentage on record (since 1971), and compared to 23 percent in the first quarter of 2006."
Source: “Monthly Mortgage Payment Almost 40% Cheaper Than 2006,” HousingWire (Nov. 9, 2011) and Fiserv

Another look at the benefits of real estate investment in a down market....

There are many affordable real estate opportunities right now in the Waterville Valley area, and considering its unique vacation destination market, utilizing your investment as a rental is easier than in other markets.  If you would like more information about how a real estate investment might make sense in your financial portfolio, please feel free to contact an agent at Roper Real Estate - www.roperre.com.   Read on.....

Investment Property the Best Return on Investment in Today’s Market

Below is a reprint of an Q and A submitted by Barbara Cunningham of St. Mary’s Bank. It addresses an issue that many people who own or are considering purchasing real estate as an investment:

"Question:  How does a declining (value) real estate market benefit a real estate investor?
Answer:  There are lots of different ways to look at the opportunities that a market with historically low propery prices, such as we currently have, can offer to an investor.

COMPARE TO THE ALTERNATIVES:

One of the more simplistic models is to compare the return on a similar outlay of cash invested in an alternative.
For example, if you have $100,000 to invest in stocks, bonds, certificates of deposit or a piece of real property, start by calculating the return that these various options generate. Certificates of deposit are paying very small returns these days, somewhere around an average annual percentage yield of 2.25 percent, and that’s for a 60-month term. Shorter term CDs are paying even less.
We have all been watching the stock market lately, and something I heard just the other day on a financial program was that, based on all the ups and downs (mostly down) in recent months, the average return on most of the major indices such as the Dow Industrial Average was about zero over the past five years. Not something that would delight most small investors!
The treasury market is more of safe haven these days to protect principal as opposed to being able to earn an actual return on the money invested there.

REAL ESTATE MARKET SHOWS BETTER RETURNS:

In the real estate market, rents have been on the rise in recent years and all indications are that trend will continue given the high amount of foreclosures, among other factors.
People have to live someplace and they aren’t all going to be able to double-up and live with relatives.  So, the demand for apartments and single-unit rentals should help sustain the rental market at least at current levels.
If a real estate investment of $100,000 can generate rental income of $1,000 per month; $465 after expenses such as taxes, insurance and operating expenses; then that’s equal to a 5.6 percent annual return without even factoring in the tax advantages!"