Thursday, October 04, 2012

HARPed

I don't know where we reside on the timeline of The Great Recession. I'd like to think we're at least half way through. Who knows? What I do know is that when I bought my house, nearly seven years ago,we were still  at the peak of the housing bubble. Compounded by the lack of available homes in the wake of Katrina. We paid too much. And we had an Adjustable Rate Mortgage. If things had gone according to plan, we would have sold the house for some kind of profit, and upgraded. Or at least refinanced at a better rate.

Flash forward to the present. Ouch. The market imploded. Despite pouring between twenty and forty grand (not including all my personal man hours) into it, the house isn't worth what we paid. And it probably is not even worth the value of the mortgage. Let alone capable of returning our investment. We've become one of the millions of families "trapped" in our mortgage.

Refinancing was going to be tough. We spent a big chunk of our reserves on the kitchen. (No debt on it, thankfully!) In the best possible world, the house would be worth the value of the mortgage. To refinance it, we'd have to pay down ten to twenty percent of it. (Fifteen to thirty grand.) Plus the fees and blah blah blah associated with a new mortgage. (Maybe seven more grand.) So on a good day I'd have to come up with twenty two - forty grand. Just to keep the house. On top of losing our initial 10% we put in when we bought it. On top of remodeling many rooms. On top of remodeling the kitchen. Tens of thousands MORE. Just to keep floating. 

That's a big burden for a man to bear. It weighed down many of my thoughts. And certainly made me want to drink rather than deal with the sad reality of the situation. 

But (drum roll) I found some help. The HARP Program. I'm sure it benefits the mortgage companies SOMEHOW, but the program is going to allow me to refinance the house at a lower, fixed rate, without having to get it re-appraised. The HARP Program assumes it is worth what I paid for it. And the fees are a fraction of a normal mortgage. Sounds too good to be true, right? God, I hope not! But we'll find out shortly. 

In theory, I pay <$200 in fees, and my mortgage is converted to a conventional one. My monthly rate won't go down (I wasn't paying any principal on the old mortgage, but now I am) but I don't have to pay upwards of forty thousand dollars, that I don't have, to get stable. 

I'll take it. Huge burden lifted off my chest. Now let's get HARPed!
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