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Calculating Your HARP Mortgage Payment

 HARP Mortgage Calcualtor Learn What A Lower HARP Payment Means

The HARP program is designed to help underwater homeowners get themselves to more stable ground. The program helps reduce the terms of a loan from 30 year mortgages to 15 or 20 year loans, lowers interest rates, and moves borrowers from adjustable rate mortgages to stable fixed-rate ones instead. Of course, it also helps homeowners by lowering their monthly payments.

Before they apply for a HARP refinance, most people are curious as to just how much lower their monthly payments will be. There are a few different factors that may have an impact on this, and getting an exact figure is next to impossible. But keeping a few basic points in mind will help you figure out a good estimate as to what your HARP mortgage payment will be.


Calculating Your New HARP Mortgage Payments

In most cases you'll have to pay your mortgage at the beginning of every month, with late fees being applied on the 15th. Keeping a good credit score is important, and avoiding 30 day or more late payments is a must for maintaining that credit score.

That's fairly common sense, and most people make their payments on time or as close to on time as possible. However, it's not uncommon to make mortgage payments without ever really paying much attention to the specific numbers that make up a total payment amount. The following factors all influence your payments, and are important for calculating a HARP mortgage payment - or any other type of mortgage, for that matter.

Principal

This is the portion of your payment that is applied towards the balance on the loan. At different times during the loan, different principal amounts are applied. As the principal amount slowly drops the balance, you'll gradually move towards paying off the loan. In many instances you can actually send in more than the monthly amount, and in these cases the extra money will be applied to the principal. However, not all lenders allow this and some may actually charge a fee if you do so.

Interest

This is actually where the majority of your payments go and in 30 year mortgages almost all of your monthly payments are applied to the interest for at least the first 10 years. This is essentially the amount that the bank is getting to keep from your payment in exchange for loaning you the money. Interest rates are currently at record low levels, which makes a strong case for refinancing through HARP.

Taxes

Taxes are one thing that can't be ignored. They'll usually be included in your monthly mortgage payment, though in some cases homeowners make their tax payments separately from the mortgage.

Insurance

Most mortgages also roll hazard insurance into the monthly bill. You'll be required to have an insurance policy in place, but many homeowners choose to pay for their insurance separately. Shopping for the best insurance policy means not only looking for the best rates, but also for the best level of protection.

Mortgage Insurance

This is a completely separate type of insurance that is required when a property has a loan to value ratio of more than 80%. The reason for this type of insurance is to offer protection to the lender in case a borrower fails to meet monthly payments and the home goes into foreclosure. This has actually been a major obstacle in refinancing home loans in the past, but HARP has made it much easier to transfer the insurance and keep things simple.

Each of these factors will influence your mortgage, and could also influence your HARP refinance payments as well. Pay special attention to interest rates since they are the primary factor in determining a monthly payment. The lower the interest rates, the lower your monthly payments will be. Currently interest rates are lower than they have been in recent memory and as a result it's worth looking into refinancing so you can lower your bills and get into a better financial situation.


  • Questions To Consider When Preparing For A Refinance

    When you're planning on beginning the application process and trying to secure a HARP loan, you'll want to ask a few basic questions that can help tell you whether or not HARP refinancing is the best option for you. HARP offers some great benefits to those who apply and are approved, but it really isn't for everyone and knowing some basic points may help you determine whether or not a different option is a better call.

    With that in mind, ask yourself the following questions to make sure a HARP refinance is what you need.

    What Is The Term?

    HARP allows borrowers to take out 15, 20, and 30 year mortgages. While most lenders will try their best to move you into a 20 year or 15 year loan due to the advantages over it, a 30 year loan is possible as well.

    Additionally, it's worth noting that in some rare cases borrowers may be able to take out an Adjustable Rate Mortgage if they meet certain criteria. But the goal of HARP is to move homeowners to stable fixed-rate loans.

    What Are The Savings?

    You'll need to take a look at payment and interest savings when moving to a better loan. Your mortgage professional may be able to help explain the details a bit more clearly and give you a better idea of what to expect in terms of your savings.

    Remember that while dropping your payment may help, moving to shorter 20 or 15 year loans instead of a 30 year one could save you more. Your payments may be the same or even increase, but in the long term you will often end up saving less. Be sure you look at long term saving options as well as short term ones in order to make sure you get the right savings in the right place.

    How Much Does The Loan Cost?

    HARP guidelines prevent lenders from place higher rates on a loan or charging higher fees. There are no LLPA fees associated, so be sure to keep this in mind when looking at your loan.

    Should I Buy My Rate Down?

    In general, closing costs can be rolled into the balance of the new HARP loan. Buying down the rate is something that may be a good idea, though it depends on what the lower rate will actually cost you. Your loan originator can give you a clearer picture as to whether or not this is a good idea for you.

    How Long Will I Stay In The Loan?

    HARP is designed for those who plan on holding on to their homes for several years, not for those looking to sell. If you're thinking of a Short Sale or some other step that will move you out of your home in the next five years, HARP probably isn't for you and you could even put yourself in serious legal trouble. Talk to your financial advisor and attorney to make sure you're making the right call before you make the move to a HARP loan if you plan on leaving your home in the foreseeable future.

  • Potential Savings With The HARP Refi Program

    Taking some time to figure up your savings with the HARP mortgage calculator can give you a much clearer picture as to how HARP can help you get your finances back in order, get a more stable loan, and move your future back into a positive light.

    HARP stands for Home Affordable Refinance Program, and it was designed to make it possible for homeowners dealing with negative equity or bad mortgages get a new refinance loan. With interest rates lower than ever, HARP has made it possible for millions to get the help they need.

    The low interest rates are a big draw for those looking to refinance, and in the majority of instances homeowners have actually been able to move from a 30 year loan to a 20 year fixed rate loan and still have a lower monthly payment.

    That means that their mortgage will be paid off ten years faster than it otherwise would and in most estimates borrowers will save around 7 years' worth of mortgage payments total. Average mortgage payments right now are around 1,000 dollars per month, and that means that by dropping to a 20 year mortgage borrowers will save more than $80,000 on their mortgages. That's a huge savings over time.

    With that in mind, it makes sense that many who refinance with HARP don't even lower their monthly payments. While a refinance through the program could drop payments, many opt to keep payments at or near their current levels and instead take the larger savings over time. But for those who are facing balloon payment and Adjustable Rate Mortgages, the lower interest rates in place today and the fact that HARP moves borrowers to a stable fixed rate loan means that monthly payments will usually drop as well.

    No matter what type of savings you want - lower monthly payments or a big long term savings over the course of the loan - HARP can help. It's important to note that traditional refinancing can often accomplish the same thing, but that it's often out of reach for the average homeowner today. The mortgage crises led to a huge drop in property values, which in turn led to millions of Americans in a negative equity situation. Negative equity often means that homeowners can't qualify for traditional refinancing, but HARP is designed to let them take advantage of today's lower interest rates.

    And now that homeowners are allowed to shop around at different lenders in order to get the best possible rates, getting maximum savings is more possible than it ever has been in the program.

    If you're a homeowner who wants to cut costs and save on your mortgage, spending a few minutes looking at the ways a HARP refi can help you is worth doing. Using an online calculator is a good first step in estimating savings, and speaking to a qualified mortgage lender will make it even easier to get a better idea of what you could be saving. Depending on your current situation and the lender you go with, you could save big.