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• Cash cannot be withdrawn during the transaction, but closing costs can be included in the mortgage amount.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