The federal government has made changes aimed at making it easier for many borrowers who owe more on their home loans than their houses are worth to refinance into lower-cost mortgages.
There are several criteria that must be met to qualify for the updated Home Affordable Refinance Program, though. For instance, your current loan-to-value ratio (the amount of your loan, divided by the value of your home) must be greater than 80 percent.
The real estate Web site Zillow.com has introduced a calculator to help you sort through the requirements to see if you’re eligible. To use it, you’ll need some basic information, like the amount of your mortgage and the date you took out the loan. You’ll also need to know if the loan is backed by one of the quasi-federal housing companies, Freddie Mac or Fannie Mae (the tool can also help you figure that out).
The changes are aimed at helping homeowners who are current on their loans, but who have been unable to take advantage of historically low interest rates by refinancing because they are “underwater” on their mortgages. Ultimately, the government hopes the move will help stabilize the housing market, which has been stagnant due to falling prices and foreclosures.
Previously, to refinance under the two-year-old Home Affordable Refinance Program, or HARP, borrowers could owe no more than 125 percent of their home’s value. But the Federal Housing Finance Agency is eliminating that cap, making the program available to many more underwater homeowners. Other changes include eliminating the need for most appraisals and scrapping many refinance fees.
Lenders are expected to get detailed information on the changes by Nov. 15; some could begin offering refinancing under the new rules as soon as December. Borrowers who owe more than 125 percent of their home’s value, however, likely will have to wait until early 2012, according to the housing agency.
As of Aug. 31, about 894,000 borrowers had refinanced under HARP; at least that many are expected to be able to refinance under the updated program, the agency said.
To qualify, your home loan must be owned or guaranteed by either Freddie Mac or Fannie Mae, the quasi-governmental mortgage outfits; you can check this here for Freddie and here for Fannie. Another option is simply to call: 800-7FANNIE , or 800-FREDDIE. (Freddie and Fannie own or guarantee roughly half of all home loans in the United States).
Here’s some other details:
- Your loan must have been sold to Freddie or Fannie before May 31, 2009.
- You must be up-to-date on your mortgage payments, with no more than one late payment in the prior 12 months.
- Your current loan-to-value ratio (the amount of your loan, divided by the value of your home) must be greater than 80 percent.
To learn more about your refinance options or to see Houston Homes in 24 hours or less call Bill Edge at 713-240-2949.
Source: Fannie Mae, November 15, 2011, Updates to HARP
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