If you are looking to do this even more effectively, you can focus on your big expenses.
If you have a mortgage, one of your largest recurring expenses is likely to be your monthly payment.
If you haven't refinanced since interest rates have fallen, you might be able to take advantage of HARP to help you save money.
Home Affordable Refinance Program (HARP) Has Been Extended
HARP has been extended from its original length, and you are able to take advantage of the program through the end of 2015.
Of course, mortgage rates have been on the rise recently (they are already more than 0.50 percent higher than when I refinanced through HARP last year), and they could go higher if the Federal Reserve continues its taper program throughout 2014 and into 2015.
Refinancing now might make sense for your finances. At the very least, you should consider it.
Advantages of HARP
HARP is designed to help middle class homeowners who have been responsible with their mortgages. Many of those who can take advantage of HARP (like myself) got mortgages they could afford prior to the financial crisis, only to find home values drop. Those homeowners can still afford their payments, but they might not be able to refinance to take advantage of low mortgage rates due to a loan to value ratio that has risen above 80 percent.
If you want to refinance, and your loan to value ratio is between 80 and 125 percent, and you meet other requirements, you might be able to take advantage of HARP. Not only can you refinance even if you have a high loan to value ratio, but a HARP refinance can also be streamlined. You don't need an appraisal, so it goes faster.
Refinancing Our Mortgage
My refinance only took about six weeks, even though there were some hoops to jump through on account of the fact that my family's income is almost entirely self-employed. I think someone with less complicated finances could probably complete a HARP refinance in a shorter time frame.
And, of course, at the end of the process, you will have savings. My HARP refinance was a success, and I save about $300 each month as a result of my HARP refinance. When Pete refinanced his home through HARP a couple of years ago, his payment dropped by over $200 per month as well.
Due to declining home values, I was unable to qualify for the best rates on a “regular” refinance through my bank. However, the HARP refinance (I went through Quicken Loans) allowed me to take advantage of the best possible interest rate available to me with my excellent credit. Additionally, the fee was low enough that it was offset in six months due to my savings.
Overall, the experience was a positive one. If you want to refinance, but are having trouble because of loan to value issues, consider a HARP refinance. If you qualify, it can help you save money each month on a large recurring bill, putting more money in your pocket, and freeing up more money to use on your own behalf.