What exactly is HARP?  It stands for Home Affordable Refinance Program.  It is an excellent program that allows a homeowner to refinance their home to be able to get a lower interest rate if they are currently underwater in their home.  Normally, if you want to refinance, your lender will determine the value of your home and you can refinance if your home is worth at least the amount that you want to finance.  An example is if you owe $150,000 on your home and you want to refinance.  When the value is determined, it has to be worth more than $150,000 to be able to refinance.  With the home market as it has been over the last several years, depending upon when you purchased, there is a chance that the value of your home has decreased.  Therefore the value may actually be less than $150,000, making you ineligible for traditional refinancing.  That is where the HARP program may be able to help you.  Interest rates are fantastically low right now and if you are going to stay in your home, you can save a lot of money over the period of your loan if you are able to refinance at a lower rate.  For more detailed information and instructions on how to apply, go to http://harpprogram.org.

Short Sales are those things that every buyer’s agent and buyer avoids.  They are avoided mainly for their unknown factor.  The largest unknown factor is the timeframe.  How long before I know whether my offer is accepted?  After my offer is accepted, how long until we can close?  I can explain and clarify a little of the process.  I currently have several houses listed in a short sale status and I am also involved on the other side of helping some buyers make offers on short sale houses.   A short sale is created when a home owner, because of extenuating circumstances, can no longer afford their house or more often, they must relocate for some reason.  The main reasons that we see for short sales in this area are layoffs or loss of employment.  In a short sale, a homeowner is current in their house payment, but for reasons outside of their control, they do not know how long they will be able to maintain their payments.    The first thing that a home owner must do is to contact their lender and have the short sale discussion with them.  The home owner will be required to prove their hardship.  If the lender accepts their premise of a hardship, the home owner is allowed to list the property as a short sale.  This simply means that the fair market price of the house is less than the loan payoff of the house.  The bank, because of the circumstances, will allow the house to be sold for less than is owed on it.  It is very important for the home owner to have representation through a real estate agent to help guide them through the process.  It is also very important for the home owner to discuss the ramifications of the short sale on their taxes with the lender and a tax expert.  There are several ways that the difference owed can be handled and each case is different.  The home owner could be responsible at closing for the difference in what is owed and what the house actually sold for.  The difference might be forgiven, but there may still be tax consequences to be considered.  Your real estate agent will be invaluable to you with the forms and the process, but they are not tax advisors and should not be giving you tax advice.  A short sale is an excellent way to possibly avoid foreclosure.  I learn more everytime that I am involved in a short sale transaction.  If you have questions or if you possibly think that a short sale may be an option for you, please feel free to give me a call or send me an email.

Last week, I had written about a new listing that I had that needed some repairs and that I thought would be great for a 203K loan.  The blog generated a phone call from Paul Welden, Director of 203k Contractors. (http://203kcontractors.com).  He took some time to give me more details on this particular loan and I very much appreciate his time.  I knew that the loan was an excellent option for anyone that qualifies for an FHA loan to actually borrow money at the same time to complete repairs that might be needed to the home.  What I did not realize (just didn’t think about it) is that the loan can also be used to update that home that you are considering purchasing.  How many times do you have a client that really likes important aspects of a home, the right school system, great location, good layout, etc, but they are hesitant because the windows need updating, or there is wallpaper everywhere?  What I now realize is that your client can use the 203k loan to borrow a little extra money to complete the updates.  Use the loan to update that bathroom, take down the wallpaper and paint and replace those old appliances.  If you are a smart real estate agent providing the best services to your client, you will help them understand the numbers if the property meets their requirements. Look at the current fair market price in the current as-is condition, get an estimate for the updates that your clients want and give them a CMA for the house in an improved condition.  This will give your clients the information that they will need to see if the updates are a smart financial choice and usually will give them instant equity in the home. With so many existing homes on the market, we owe it to our clients to explore all of the possibilities for them to be able to get the best deal possible on the home of their dreams.