If your mortgage is higher than the actual value of your home, chances are that you’re paying extra money on your mortgage every month. According to a recent study by CoreLogic and the Associated Press, the average underwater homeowner is paying an interest rate that’s nearly 40 percent higher than they could get if they bought a home today.
That translates to paying an extra $200 a month on a home valued at $250,000, according to the report.
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A person with good credit who applies for a 30-year mortgage today qualifies for an interest rate of 4.11 percent, as we reported.
But the average underwater homeowner is stuck with an interest rate of 5.7 percent, the Associated Press and CoreLogic found.
That may not sound like an important difference. But to many people, a couple hundred dollars a month could mean the difference between paying their mortgage versus losing the home to foreclosure.
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The Obama administration recently announced it will loosen the rules to help more people qualify for mortgage modifications under the Home Affordable Refinance Program (HARP).
But the help may be limited, since the revamped program still contains no requirements that lenders participate. And as our own Gerri Detweiler reported, homeowners only qualify if they are current on their payments, have no late payments in the last six months, and no missed payments within the last year to qualify.
That probably means that millions of homeowners will remain underwater on their mortgages, and will continue paying significantly more in interest than people who take out new loans.
[Related article: More Help for Underwater Homeowners]
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