Underwater Loans for 125% RefinancingBy
Over the last few years many people have been rejected for getting lower and more affordable mortgage refinance rates because they owe more on their mortgage than their home is worth. Unfortunately millions of Americans saw their property values plummet between 2007 and 2011 and if your mortgage is greater than the value of their house and most lenders will not approve home refinancing to borrowers with underwater mortgages — at least until now. Government mortgage finance companies, Fannie Mae and Freddie Mac got together to create the Home Affordable Refinance Program.
The good news is that the “Home Affordable Refinance” was extended until June 2012. The government had initially set the expiration date for next month, but Congress voted to extend the HARP mortgage relief initiative for another year. For example, if you purchased your home before the housing bubble burst. Most borrowers who bought their house in 2006 or 2007 have an interest rate at about 6% if they got a 30-year fixed rate. If the borrower got an option ARM or a 3/1 ARM then their rate has converted to an adjustable rate that has likely risen to 8%. Either way, taking advantage of a “refinance” makes sense because fixed rates are well below 5% for people with fair or good credit scores.
No equity refinancing has almost vanished in recent years as lenders have been pressured by banks and the government to tighten lending guidelines in an effort to minimize home foreclosures. Greg McBride with Bankrate.com says Home Affordable Refinance Program is the only real solution left to help distressed homeowners who have been rejected to refinance their home due to a lack of equity. McBride said “To be eligible, you have to be current on your payments. The other important issue for qualifying is that you have a Fannie Mae or Freddie Mac mortgage that they guarantee. McBride continued, “Your mortgage balance cannot exceed 125% of the present appraised value of your home. So find out if meet the criteria for the HARP refinance program and compare rates with participating lenders like Quicken, Nationwide, or Loan Depot.
| No Equity Home Refinancing to 125%
How Do I Know Who is Servicing My Mortgage?
Fannie Mae has an online tool, for homeowners who need help determining whether Fannie Mae is the investor on their home mortgage. Check out the “Loan Lookup” is available at FannieMae.com. The tool will uncover whether Fannie Mae is the investor on a home at a specific address, but it will not determine if the borrower qualifies for 125% refinancing under the HARP program. You will need to discuss eligibility with a lender that is approved for the Home Affordable Refinance Program. Make sure that you are shopping refinance loans with a HARP lender or you will be wasting your time. In addition, the Desktop Underwriter will determines if the borrowers and property address on a refinance transaction are associated with an existing mortgage serviced by Fannie Mae, and applies the DU Refinance Plus expanded eligibility guidelines, when applicable. Homeowners can also contact Fannie Mae by phone at (1-800-732-6643).
If you do not meet the HARP requirements for refinancing because of poor credit scores, late mortgage payments or subordinate financing like a 2nd mortgage then consider a loan modification. The Home Affordable Modification program is intended for borrowers who do not have the ability to make their mortgage payments, even with a refinance. To be eligible for Home Affordable Modification, the borrower is required to “document a financial hardship and represent that s/he does not have sufficient liquid assets to make the monthly mortgage payments.
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