[Update -- The Fed and Obama administration have been compressing mortgage interest rates since first part of 2009 but are now winding down those programs. Mortgage rates on fixed-rate government-backed loans are currently coming in between 5.0% and 6.0% but may be significantly higher in a few months so contact us today if you are in an ARM or your fixed loan rate is 5.75% or higher. ]
President Obama recently announced his Homeowner Affordability and Stability/ Making Home Affordable Plan. This plan is in addition to the finance bills passed by the US congress in 2008 and early 2009. The new laws and plans include stipulations should make it easier to refinance mortgages to the historically low interest rates we are seeing in 2009. These new government-backed loans are the best and often only refinance option available for homeowners facing difficulties due to rising interest rates and increasing payments. Government-backed mortgages are also the only viable refinance option for homeowners with credit scores below 700 or with less than 25% equity left in their home.
We have been authorized to offer homeowners a new fixed rate government-backed mortgage relief loan. (Click here to learn what sort of things disqualify borrowers from refinancing and click here to learn more about fees commonly associated with FHA loans.)
For Homeowners with Equity
With the traditional FHA loan program a homeowner can get a fixed rate loan for up to 97% of the current appraised value of their home. Via the new Homeowner Affordability and Stability Plan homeowners with conforming loans can now refinance up to 105% of the appraised value of their home. By taking advantage of Government Refinance Assistance, you could save thousands of dollars on your mortgage payments over the next few years and have the peace of mind of knowing that your home is financed with a low fixed rate. Plus FHA allows homeowners in most states to get a cash out refinance for up to 85% of the current value of the home.
If you have looked at the FHA and conforming loan requirements and feel you could be a good candidate for a government-backed loan contact us today by filling in the contact form on the right. Here are the basic steps we will follow to help you get into an improved mortgage if you are a good candidate. [Note: If you have a mortgage interest rate of 6.5% or higher, odds are pretty high that a government-backed refi will be a good idea.]
Also, home prices have been dropping quickly all across the US and are expected to continue to fall for some time so if you still have equity in your home and are in an adjustable rate mortgage (ARM) or you are in need of cash out to pay down expensive credit cards or other expenses or just have an interest rate of 6.5% or higher it might be a good idea to seriously investigate refinancing into a 30-year fixed government-backed FHA loan now rather than risk waiting too long and not having enough equity later.
For Homeowners with No Equity
As of April 2009 there are a few options for homeowners who owe more on their home than the property is currently worth. Here are a few:
1. FHA and VA Streamline Refinance — If you are upside down / underwater on your mortgage and currently have an FHA or VA loan then getting a refinance to an improved mortgage should not be difficult if you have kept up with your mortgage payments. Contact us today if this applies to you. FHA and VA streamline loans are widely considered the most cost effective and consumer friendly refinance loans available.
2. A “Homeowner Affordability and Stability Plan/ Home Affordable Refinance” — With President Obama’s new plan qualified homeowners can refinance a conventional first mortgage for up to 105% of the current value of the home (soon to be 125%). However this program does not work well for people who have second mortgages, credit scores below 680, or who currently pay mortgage insurance (PMI).
3. Subordinating your second mortgage — If you have enough equity to cover a first mortgage but not enough to cover your first and second mortgage combined there is a possibility you could refinance the first mortgage to a lower rate and keep the second mortgage in place (a process called “subordinating the second”). These so-called “Subordination Deals” can be tricky and time consuming and often require a few hundred dollars investment up front. Contact us for more information on that subject.
4. Loan Modification Programs — If you owe significantly more on your first mortgage than your home is worth or are on the verge of foreclosing your best bet is to work with your current lender on loan modifications. Loan modifications normally reduce payments by lowering interest rates or extending the loan period. See here for a recent post on a loan modification success story. Obama’s new “Home Affordable Modification Plan” gives lenders incentive to modify troubled loans as well.
Note: Sometimes lenders are not very cooperative about loan modifications so contact us if you would like a referral to a network of reputable attorneys who, for a fee, assist people in obtaining loan modifications.
5. Hope for Homeowners (H4H) loans (aka FHA short refi loans) — The Congress passed a major housing bill on July 30, 2008 that added important features to the FHA program. The new legislation was intended to offer foreclosure prevention hope to homeowners who are “upside down” on their homes (or owe more than the home is now worth). The program had a disastrous start but the Obama administration announced changes in late April 2009 that are aimed at reviving H4H. See articles on the qualifications for the new FHA “short refi”, or HOPE for Homeowners (H4H) loan program here. If you are interested in this program your best bet is to contact your current lender and see if they are participating.
Be sure to bookmark this site and check back for the latest updates on government-backed efforts focused on alleviating the housing crisis in the US (see stories below).
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