Oct 31, 2011
New HARP may have hit the sweet spot
31 Oct 2011
Posted by Andrew Kantor
Much was said and predicted about it — it’s good, it’s bad, it’s too little, it’s too much, it’s a good step, it’s a bad idea, and on and on.
Well, now the folks at The Mortgage Reports have some data, and at first blush it seems that A) people are applying for HARP, and B) they’re exactly the people it targeted. “The new HARP Refinance is the loan program for which they’ve been waiting since 2007,” says TMR.
The new HARP allows refinancers to avoid the whole loan-to-value issue. It’s not about what the home is worth, it’s simply about whether you are making payments. If you are, HARP 2.0 lets you get a better rate. That will free up capital and (hopefully) help boost the economy while helping those underwater homeowners.
About 60 percent of HARP refinance applicants have owe between 105% and 150% of their home’s value — in other words, these are mostly people who didn’t go crazy with overbuying, but have seen their home value plummet.
And their current rates are, for the most part, between about 5.5% and 6.75% — low at the time, but way high compared to today’s (4.21% for a 30-yr fixed in Virginia, as I write this).
Of course, it’s only been a few days since the new HARP too effect, but this first glance seems to offer some positive news.