Many Americans are seeing their neighbors sell their houses and making a profit. When you see this all around you, it’s tough not to want to jump in and join them! But what if you have recently refinanced using HARP? Can you sell your house after HARP refinance?
What is HARP Refinance?
HARP (or Home Affordable Refinance Program) is a government program that helps out those who have little-to-no equity in their house. The program helps them by allowing them the opportunity to refinance, ultimately giving them a lower monthly payment. There are specific guidelines for refinancing through HARP that you will need to pass through to refinance. To find out more about HARP Refinance, go here.
Can I sell my house after HARP Refinance?
Many people wonder if they can sell their home after refinancing through HARP. Although you can sell your home after refinancing through HARP, there are some things to keep in mind before you do.
Why You Refinanced
Why did you refinance through HARP? If you are like thousands of Americans, you refinance using HARP because you had no other refinancing options. The reason you had no other refinancing options is that you had little-to-no-equity in your home.
Let’s jump into a quick recap of how refinancing works:
Typically, you buy a house for an interest rate that is dependent on your down payment as well as a few other calculations. At the time of purchase or further down the road, you may discover that you have some equity in the home. You take out a loan against your house for the dollar amount that you own, and your loan is reset to 30 years. Let’s look at an example.
Example: Bob and Sally purchase a home for $200,000. The home is valued at $250,000, and they pay off $50,000 more. Because the value of the home is $250,000, they now have $100,000 in equity. Bob and Sally decide to take out a loan against the amount they own in the house and use it for another house. Their loan is now reset to 30 years for the amount of $250,000 with a lower monthly payment. If they go to sell, they are now going to need to a) sell the home at least for the amount they owe or b) sell the home and pay the difference out of their own pocket.
That’s how refinancing normally works. Let’s take a look at how it looks for someone who uses HARP.
Example: Bob and Sally purchase a home for $350,000. The home is valued at $200,000, and they are barely staying afloat with the monthly payment. They’ve paid the loan down to $205,000 before they refinance through HARP. They now have a lower monthly payment and they have more time to pay off the loan. But they still owe $205,000. If they go to sell now, they will a) have to sell the home for at least the amount they owe on it or b) pay the difference. If the market is doing well, they may come out ahead. But they have to be unable to pay the difference in order to use the HARP program. Which means if they can’t afford the difference when refinancing, how are they going to afford the difference when they sell the house? Beyond that, they still need a place to live. How are they going to afford a down payment on that home?
Should I sell my house after HARP Refinance?
We’ve established that yes, it is possible to sell your house after you refinance with HARP. But should you sell your house after using HARP?
You sell your house should if:
- You are able to make money on the property or at least break even
- You have some money set aside that you can pay the difference, if necessary
- You’ll be better off financially after the sale of the house you refinanced
If you cannot afford to pay the difference or would be worse off financially after the sale of your house, it’s not a good idea.
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How can I sell my house after HARP Refinance?
You sell your house the same way you would sell your house if you had refinanced it without HARP. You make sure the comps in the area show that you can get your value out of the sale and price it accordingly. It is imperative that you use a real estate agent who knows what they’re doing, or you risk losing money on the sale of the home. If you are looking to save money on the sale of your home, contact a full-service discount agent. Make sure you ask them the right questions to make sure they’re right for the job. You don’t want to end up owing a bunch of money at the end of the sale, or you’ll be right back where you started.
Need help selling your home after a refinance? Choose an agent that knows how to help you get the most out of the sale of your home, and does it for a discounted fee. Choose Clever! Call us today at 1-833-2-CLEVER or fill out our online form to get started.