From wallet pop
Several homeowners have tried to refinance their current mortgages and found out their appraisals came in too low- normally the deal would be dead at this point but thanks to a new government program- this kind of problem won’t kill the deal!
Appriasals have always been key to refinancing. Traditionally, the mortgage amount could not exceed the property’s current market value. Thos with ARM mortgages stuck with unaffordable mortgage payment, or those tempted by historic low interest rates have good reason to want- or need- to refinance. Luckily, the federal government has introduced programs to help.
The Obama Administration’s Home Affordable Refinance Program, launched early this year, allowed refinances for those whose first mortgage was as high as 105% of a comparable market analysis (CMA). A July expansion now allows participation by borroweres current on payments, but up to 125% “underwater”. This escpecially helps those i down markets, such as Las Vegas, where about two-thirds of current mortgage holders owe more than the worth of their homes. Nationwide, 4 to 5 million homeowners whose mortgages are owned or guaranteed by Fannie Mae or Freddic Mac might reach more affordable monthly payments through the program, which falls under the broader Making Home Affordable initiative.
Those with government-based Federal Housing Administration (FHA) loans also have new refinance opportunities thanks to the American Recovery and Reinvestment Act of 2009. The revised single-family loan limits now reflect the higher loan limits set by the Economic Stimulus Act of 2008 or the Housing and Economy Recovery Act of 2008, all deteremined by county or metropolitan area. Effective through the end of 2009, those limits range from $271,050 to $729,750 and permit FHA to insure loans on amounts up to 125% of the 2007 area median house prices.
Additionally, this past May, the Helping Families Save Their Homes Act removed some administrative and technical hurdles that made last summer’s HOPE for HOmeowners Act so difficult to implement that most people didn’t bother trying. the bill helps homeowners with FHA or USDA rural housing loans to modify or refinance their mortgages.
Jorge Gomez, president of the Illinois of Mortgage Professionals, says, “In theory, [new loan limits] will open up many new opportunities for people to refinance.” Still, borrowers with a second mortgage may not benefit, since the law doesn’t require second lien holders to comply by subordinating their debt.
Regarding the program for Fannie Mae and Freddie Mac loans, marve Stockert, executive director of IAMP, urges anyone who can’t sell their home to use it, ” because this type of program may not come aroudn again.” HOme Affordable Refinance expires on June 10, 2010.
Dan Milstein, CEO of Gold Star Mortgage Financial Group in Ann Arbor, Mich., notes that while “extra room in terms of value will be helpful in the refinance process,” the true impact of the change from 105% to 125% “remains to be seen.” Besides the second mortgage issue, he explains that loan guidelines remain the same, with verification required for all information. There’s a slight increase of getting an appraisal waiver, but full appraisals are often still required for these transactions.
Those best suited for these programs says Milstein, are homeowners ” who originally had 20% or more equity in his or her home and then lost that equity not due to increased borrowing, but rathere to the slump in the housing market.”
The bottom line: The refinancing rules are changing everyday. As many homeowners can attest, there’s no reason to let a decrease in your home value hold you back from attempting to refinance. Be proactive and investigate how new stimulus programs might help you lower your interest rate and save on your monthly mortgage payments.
