Underwater Homeowners Have Chance to Refinance

Underwater Philadelphia area homeowners may be missing an opportunity to refinance their mortgage loans and lower costs.

Up to 17,026 borrowers in the Philadelphia-Camden-Wilmington metropolitan area who owe more on their mortgages than their home is worth may qualify for refinancing under the federal Home Affordable Refinance Program (HARP).

The program, which was established in 2009, has been revamped under simpler guidelines that require less documentation and expand eligibility. The deadline to refinance through HARP has been extended to Dec. 31, 2015.

The Federal Housing Finance Agency, which oversees the HARP program, estimates that 810,000 eligible homeowners nationwide are eligible for refinancing. In Pennsylvania, an estimated 27,922 homeowners statewide are eligible for HARP refinancing.

The number of underwater homeowners is shrinking. But Zillow estimates that one of six U.S. homeowners, or 8.7 million Americans, was still mired in negative equity in the second quarter.

HARP refinancing can translate into several hundreds of dollars in savings each month for borrowers who obtain a lower interest rate, shorter loan term or change from an adjustable to a fixed-rate mortgage.

Mortgage holders who were previously turned down for HARP may now meet the requirements. To qualify, you must have a loan that is owned or guaranteed by Fannie Mae or Freddie Mac that was originated on or before May 31, 2009. You must also be current on your mortgage with no late payments in the last six months and no more than one late payment in the last year. And the current loan-to-value (LTV) ratio on your home must be greater than 80 percent.

Borrowers can now refinance regardless of how far their homes have fallen in value.

No minimum credit score is needed to qualify for HARP refinancing.