Borrowers Turning Down Great Refinancing Deals

It seems like a no brainer: Drop two or more percentage points off your mortgage interest rate, and save a couple hundred dollars a month without extending your mortgage term.

However, many consumers are turning down deals that could save them money with a refinance. According to Fortune, a number of homeowners are missing out on huge savings on their mortgages by refusing to refinance.

In 2010, the government introduced the Home Affordable Refinance Program (HARP) with the intention of helping homeowners refinance. The requirements have been eased since the introduction, and a number of homeowners qualify. Unfortunately, the program is still widely unknown to the public, and there are reports from Quicken Loans that only 25% of those who qualify take advantage.

HARP is designed to help homeowners who have been responsible with their home loans. The program allows you to refinance up to 125% of the value of your home if you meet the requirements for paying your mortgage on time, and if your mortgage is a FHA loan, or serviced by Fannie Mae or Freddie Mac.

Even when the details are explained to homeowners, though, many of them still refuse. This has been frustrating for many loan companies, since there really isn’t a downside. Even though the loans have origination fees, many homeowners could see savings that allow them to recoup the fees in four to six months.

Part of the problem is that the loans seem too good to be true. No appraisal, refinance for homes that have lost value, and low interest rates seem like it could be a trick. However, if you qualify for HARP, and if you get a loan from a reputable lender, you could see more money in your pocket each month.