Title

Home refinance program expanded

     We’ve written here in the past about tax credits and about government programs aimed at saving homes from foreclosure and making home payments more affordable. Now, it looks as though the Obama Administration wants to expand those programs to make them apply to more borrowers than before.
 

    Until now, those government programs have been available to people whose mortgage amounts are up to 105 percent of a home’s value. This week, the administration announced that it wants to raise that limit to 125 percent of value.
Here are some of the conditions that apply:

• The mortgages in question must be owned or backed by Fannie Mae or Freddie Mac.
• The applicants for new financing must be current on their mortgage payments.

     It is estimated that 30 percent of all mortgages are for amounts that exceed their homes’ values.
     The expansion of this federal home refinance program is an acknowledgement that the original program fell far short of expectations. When it was announced in March, the Obama Administration said it hoped that it would help 4-5 million homeowners who were upside-down on their mortgages. But in the middle of June, the administration admitted that only about 20,000 homeowners had applied to refinance their mortgages under the plan.
One problem has been rising interest rates. Current rates are around 5.5 percent, up from 4.84 percent in April. That rate increase has put a damper on refinances. The government hopes that the new expansion will encourage more homeowners to refinance their homes, and those refinances will make the homeowners less likely to default on their mortgages.
     Got a home in Palm Harbor, Dunedin, Clearwater, or anywhere else in Pinellas County with a mortgage bigger than the home’s value? This expanded program may be for you.

Tags: making home affordable, mortgages, pinellas county, refinance

Pinellas homeowners: New program makes refinancing possible

Would you like to refinance your home, but find that you can’t because the value of your property has declined? You may be able to refinance anyway under the federal government’s new Making Home Affordable program.

This is good for some homeowners in Pinellas County and in Tampa Bay, where foreclosures and declining values are among the highest in the nation.

Making Home Affordable has two parts – one allows for the modification of existing mortgages, while the other offers opportunities for home refinancing, if the home mortgage is owned or guaranteed by Freddie Mac or Fannie Mae.

Let’s look at the refinancing function of Making Home Affordable:

• To qualify, borrowers must occupy their homes. The home may have up to four units, but the owner has to occupy one of them.

• Interest rates under Making Home Affordable are “market rates,” but it is a little unclear what that means exactly.

• Loan balances may be as much as 105 percent of the current value of the home. Otherwise, borrowers have to comply with all the other usual underwriting demands, things like all payments must be current, income has to be high enough to cover the new payment amounts, and there can’t be more than a single late payment during previous 12 months. 

• Mortgage insurance on the old loan will carry over to the new loan – a little unusual, because generally mortgage insurance policies end when the loan is paid off; then a new policy gets issued for the new mortgage.

• It’s okay to have a second mortgage on the property as long as the second mortgage holder has agreed to remain in the second position lien-wise.

• Cash cannot be withdrawn during the transaction, but closing costs can be included in the mortgage amount.

To learn more, visit http://www.MakingHomeAffordable.gov

Tags: making home affordable, pinellas county, refinancing