Millions of American Homeowners Could Refinance and Save with HARP

by Sean Bryant on June 14, 2013

This post brought to you by Quicken Loans. All opinions are 100% mine.

by Clayton Closson

You read that title correctly.

An estimated 2.7 million American households could refinance to today’s mortgage rates (which are near historic lows, in case you haven’t been paying attention) through the gov’s HARP program. And they can do it even if they owe more money than their home is worth. Up to 200%. But they aren’t. And we don’t know why.

Why don’t they want to lower their mortgage payment?

Why don’t they want to shorten the term of their loan?

Why don’t they want to save thousands in mortgage interest?

We wish we knew, because then we could reach out to them and explain why they absolutely should take advantage of HARP while it’s still around. Which brings up some good news for American homeowners. HARP has been extended through 2015. That’s a good thing. The bad thing is that mortgage rates most likely won’t stay as low as they are for very long. At some point, once rates rise, the ability to save money with HARP may be diminished.

Jordan Fylonenko recently met with Quicken Loans Chief Economist Bob Walters to discuss HARP and what’s going on with the millions of folks who haven’t taken advantage of it.

Before we show you the video, here’s some info on HARP from our Press Room.

The FHFA’s announcement to extend the HARP deadline to 2015 is much needed for the estimated 2.7 million underwater homeowners who are eligible and still able to benefit by refinancing. Unfortunately, a too-good-to-be-true perception coupled with long lines to refinance and repeated “no’s” from lenders who are not utilizing HARP to its fullest extent have left many disgruntled to enter another arduous loan process. But for those homeowners needing a personal stimulus, picking up the phone again is well worth it.

The average savings from a HARP refinance is around $200 a month with an average rate reduction of 1.75%, resulting in $2,400 savings per closed loan per year and $74,000 per lifetime (assuming a 30-year mortgage). The potential stimulus for the economy is even more significant, reaching up to $6.5 billion ($2,400 in savings a year per consumer x 2.7 million consumers).
These savings are more than just numbers on a spreadsheet. A Quicken Loans client and active duty Air Force recruiter from Sacramento, CA, was able to cut $763 off his monthly payment for his investment property and lowered his rate down by more than a point through HARP. This was after his original lender told him they couldn’t help.
Another Quicken Loans HARP client from North Brunswick, NJ, was able to save $387 on his monthly payment and lower his rate by more than a point to 3.85%.
In a monthly video series, Markets and Musings, Quicken Loans Chief Economist sat down to discuss some of the recent changes that have opened up HARP to more underwater homeowners.

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Sean Bryant

Sean Bryant created in 2011 to help pass along his knowledge of finance and economics to others. After graduating from the University of Iowa with a degree in economics he worked as a construction superintendent before jumping into the world of finance. Sean has worked on the trade desk for a commodities brokerage firm, he was a project manager for an investment research company and was a CDO analyst at a big bank. That being said he brings a good understanding of the finance field to the One Smart Dollar community. When not working Sean and he wife are avid world travelers. He enjoys spending time with his daughter Colette and dog Charlie.
  • My rate is really low, but I’m frequently surprised when people don’t take advantage of these things when they bought their homes in times with higher interest. You could save so much money that you can put toward the principle!

  • I don’t know what fees are associated with HARP loans, but as long as it doesn’t take years to break even, refinancing can be a very good thing.

    Here’s the rub, most people will just blow the extra money saved by refinancing. Unless people make a choice to improve their relationship with money, they will never get ahead. I see it happen all the time.

    Second, I am completely against refinancing into a shorter term. Especially for people who are in a tight financial situation and don’t know how to live far below their means.

    I’ve seen people forced into selling their homes when events truly out of their control cause them to no longer be able to afford the carrying cost of the home.

    An example of this is the loss of a job combined with the loss of a spouse. The idea of a short-term loan (10-15 years) sounds good when times are good, but stack two tragedies up and things now look different.

    If they had kept a 30-year loan, they may have been able to keep the home. You can always pay more but when you have equity in the home and no income, no lender will give you a loan, not even a HARP loan.

    Ree ~ I blog at

  • MoneySmartGuides

    I wish I could refi with HARP, but my condo development isn’t FHA approved, so it’s not an option for me. But if it was, I would be one it right away!

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