Underwater? New calculators tell you when you won’t beby Tim Manni
Is your home underwater—do you owe more on your mortgage than your home is worth? If so, you’re not alone. Recent data suggests that nearly a quarter of all residential mortgages in this country are underwater. But with the release of two new underwater mortgage calculators from HSH.com, underwater homeowners can now determine exactly when they won’t be.
Underwater homeowners can refi with HARP 2.0
According to CoreLogic’s Negative Equity report, “11.1 million, or 22.8 percent, of all residential properties with a mortgage were in negative equity at the end of the fourth quarter of 2011. This is up from 10.7 million properties, 22.1 percent, in the third quarter of 2011.”
The good news is that underwater homeowners will get a chance to refinance their home loans to near-record-low mortgage rates this week as Fannie Mae and Freddie Mac roll out their HARP 2.0 software.
Last fall, the Obama administration announced the expansion of the HARP refinance program to encompass all homeowners with Fannie Mae- or Freddie Mac-backed mortgages, regardless of how underwater they are.
New underwater calculators from HSH.com
To help borrowers better understand how different variables—amortization, appreciation and prepayment–affect their underwater situation, HSH.com has created two new mortgage calculators known as KnowEquity When and KnowEquity How.
These mortgage calculators show underwater homeowners when they will be back in the black and also the combination of amortization, prepayment and home price appreciation needed to meet their future equity goals.
“Regardless of whether underwater homeowners refinance under HARP, they should have a good idea of when they will no longer owe more than their homes are worth,” said Keith Gumbinger, vice president of HSH.com. “Even with a refinance to today’s low rates or a principal reduction, many borrowers will continue to be underwater for years to come–which can affect everything from college planning to retirement.”
Mortgage rates are still falling
According to HSH.com’s latest Weekly Mortgage Rate Radar, rates on the two most popular types of mortgages eased back once again.
The average rate for conforming 30-year fixed-rate mortgages fell by 3 basis points (0.03 percent) to 4.01 percent. Conforming 5/1 hybrid ARM rates decreased by 2 basis points, closing the Wednesday-to-Tuesday wraparound weekly survey at a new record-low average of 2.92 percent.
Mortgage rates this low (and for this long) present incredible opportunities to borrowers. And with the refinance options presented to borrowers through HARP 2.0 as well as the FHA’s new streamline refinance, the saving are there for the taking.
Underwater homes aren’t going away
Given the fact that home prices remain weak in many markets around the country, the underwater problem isn’t going away anytime soon. In fact, many homeowners are teetering on the edge of negative equity.
CoreLogic reports that “an additional 2.5 million borrowers had less than five percent equity, referred to as near-negative equity, in the fourth quarter. Together, negative equity and near-negative equity mortgages accounted for 27.8 percent of all residential properties with a mortgage nationwide in the fourth quarter, up from 27.1 in the previous quarter.”
If you’re underwater, HARP 2.0 has made refinancing your mortgage possible, but it may not change the fact that you’re still underwater. With the release of HSH.com’s two new underwater calculators, KnowEquity When and KnowEquity How, at least you’ll know when you won’t be.