Condo owner snags HARP deal
Changes to Home Affordable Refinance Program allow a condo owner to refinance at a lower interest rate.
Special to The Seattle Times
What is HARP?
The Home Affordable Refinance Program (HARP) began in 2009 to help homeowners who owed the bank more than the value of their house to refinance into better interest rates in hopes of bolstering a shaky housing market. As of December, only 1 million of the anticipated 5 million HARP refinances had taken place, says the Federal Housing Finance Agency.
The new guidelines let underwater homeowners who've been paying their mortgage on time, have decent credit, and whose loan is backed by Freddie Mac or Fannie Mae take advantage of low interest rates.
There are no longer any caps on how underwater a homeowner could be.
HARP 2.0• Freddie Mac or Fannie Mae must own or insure mortgage.
• Follow the links in makinghomeaffordable.gov, or contact your lender.
• Be current on your mortgage for six months and have no more than one late payment in the last 12 months.
• Have secured your loan on or before May 31, 2009.
• No previous HARP refinancings.
In 2006, when I bought my Eastlake condo, any standing place that had walls was considered a good investment. I jumped in, buying the place that I had been renting. It was small and a bit outdated, but if felt good to own.
Six years and one Great Recession later, the value of my little 434-square-foot home in Seattle seemed like the equivalent of a newer model Hyundai.
A few attempts at refinancing out of my old 5.8 percent 30-year fixed interest rate mortgage and into an attractive 3 or 4 percent rate ended in disappointment; I didn't qualify because I didn't have equity.
I also was pretty sure that I was underwater on my loan. According to Zillow.com, the condo's value had shrunk far below my purchase price of $179,000.
What I did have were friends who were renters. They told stories of inexpensive city view apartments with rooftop dog runs and marble bathtubs. But, I was stuck. I couldn't rent out my place, built in the 1980s, for what my mortgage cost me and I couldn't sell my way out of it either. "Maybe when the housing market picks up," became my mantra. For four years.
One day a friend in the housing industry handed me a flier. "Revamped Making Home Affordable Refinance Program (HARP) offers hope for homeowners."
Hope? Sign me up.
I ripped the flier out of her hand and was on the phone with my lender, JPMorgan Chase, within 15 minutes. I later learned that HARP allows homeowners to refinance through any bank, not just their own lender. If only I had known, I might have saved weeks of refinancing ridiculousness.
Yes, we can make this happen right now, said the Chase mortgage consultant during our phone call. I had been unknowingly transferred to Phoenix, Ariz. He said he just wanted my credit-card number so he could give me an estimate. Assuring me that he would not run my credit card, and him telling me that is was necessary to complete my estimate, I handed it over.
I learned my interest rate could go down to 4.5 percent, which could potentially save me about $200 a month. Large and impressive-looking packets of loan information started arriving in the mail next-day-air and an escrow agent called. I also received a $395 application fee charge to my credit card. This was surprising.
I called Chase again and was told that I provided "verbal approval" when I called back for additional information.
I called and emailed the supervisor to make sure my fee was refunded. When I told my mortgage consultant from Chase that I wanted to shop around for a new mortgage, he cautioned me that a local bank might not be as easy to work with. "You are going to be out two applications fees and you'll just have to come back here and start over again," he warned. I'll take that chance, I said.
I Googled the name of my Chase rep and found a Facebook page. I learned he was just a regular guy, who liked Will Ferrell movies. I like Will Ferrell movies. Maybe he was just stuck in a rough job. I decided to forgive him — after the refund finally was posted on my credit card.
I was ready to move on.
I decided to ignore the mortgage consultant's advice and found the warm and fuzzy Seattle HomeStreet Bank.
My loan officer, Rich Jonson, calmly walked me through the process at a less frenetic pace. Suddenly there was trust and a friendly person on the phone. He quoted me a 4.25 percent interest rate, saving me more than $200 a month.
The appraisal came in above the Zillow estimate, so I was no longer underwater on my loan.
Because I didn't have mortgage insurance on my old loan, I didn't have to pay it with my refinance under this program. That had been a stumbling block in the past when I tried to refinance because a better interest rate wasn't any good if I was just going to have a new fee tacked onto my loan that would push up my monthly payments.
Because of changes to the HARP program announced in October, including lifting the loan to value cap or amount a home is underwater, there could be an opportunity for a slew of underwater homeowners to qualify. Or people like me with little or no equity built up.
My condo with its view of the Space Needle looks a lot nicer now that it's cheaper. It actually feels more pleasant to walk through the door at the end of the day, even if I don't have a rooftop dog run or a marble bathtub. I feel like I finally might have some options, either to fix it up or to sell one day.
And I joined the board of the condo association with the idea of making things even better. Maybe there is hope after all.