February 7th, 2013
f your home is worth less than what you owe, you’re underwater, and that’s not a fun place to be, especially with interest rates at historic lows.
You can make the payments, but you’d rather not spend that much on them. Here’s what you can do.
Housing prices have gone up in a number of areas. Your home may have crossed the threshold. Or perhaps you received a low appraisal when you purchased the home. (Please see our other blog post on tips for increasing your appraisal value.)
If you can show that you’re a good lending risk and all of your obligations are current (see our post on your credit score), lenders tend to be more flexible as you’re not a credit risk.
First, figure out who guarantees or owns your mortgage. If it’s backed by Fannie Mae, Freddie Mac, FHA, VA or USDA, then there’s a good chance you can refinance.
There is a Federal program called The Home Affordable Refinance Program (HARP) part of the Making Home Affordable program. They have certain requirements for refinancing:
If your loan is backed by the FHA, you will want to look into the FHA Streamline Refinance program. Their requirements are:
If you’ve financed with Veterans Affairs (VA), then you will want to find out more information about that Interest Rate Reduction Refinancing Loan (IRRRL). Their only requirement is:
And if you’ve been guaranteed by the USDA, there is a pilot program (only available in AL, AR, CA, FL, GA, IL, IN, KY, MI, MS, NV, NJ, NM, NC, OH, RI, SC and TN) called the Single Family Guaranteed Rural Refinance Pilot. Their requirements are:
Sometimes, things happen. You had the flu and forgot to schedule the payment until it was considered late. Money was tight. We’ve all been there. There is a program as well called the Home Affordable Modification Program (HAMP)
The final step for all of the options is to contact your local mortgage loan officer and verify your eligibility and find the best rates for your situation. Loan Officers are trained in all of these programs and monitor the rates to find the best options for you.