Q: “We are way ‘upside down’ in the value of our home compared to what we owe, but we have been able to keep up our payments and want to stay in the house for at least several years. We cannot get an appraised value that will allow us to refinance, yet I keep hearing about programs the government has issued. Any help available?”
A: Your timing is excellent. There is a good program available for borrowers who have kept their payments current, and this program has just been extended for two years. I am speaking of what we call HARP, the Home Affordable Refinance Program issued through the Federal Housing Finance Agency, which is available for certain conventional, conforming mortgages.
According to the latest news, which announced extension of the program to 12/31/15, “more than two million homeowners have refinanced through HARP.” I think many more could if they knew of the rules and the availability. It is designed to help homeowners whose loan-to-value (LTV) ratios are too high for standard refinancing (aka “underwater”).
To qualify for a HARP refinance, a homeowner must be current on the mortgage, with no late payments in the last six months and no more than one late payment in the previous year ¬on a mortgage that was sold to Fannie Mae or Freddie Mac prior to May 31 2009.
The current LTV ratio must be greater than 80%, and you must have a reasonable ability to pay the new, lower payments. The previous maximum LTV limit for eligibility has been removed. Now refinances are available anywhere from 85% to 150% or more; it depends on the lender and their guidelines. And current values are often obtained without an appraisal.
A person may even have an existing second that can remain if the combined LTV meets your lender’s requirements and the junior lien holder agrees to remain in 2nd position. How can you find out if your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac, the two large secondary market sources? Check online www.fanniemae.com/loanlookup or www.freddiemac.com/mymortgage or ask your mortgage advisor.
Karen Davis NMLS #245892 is regional vice president of The Mortgage House, Inc. She has over 36 years’ experience in the mortgage banking industry. Your e-mailed questions are welcomed through her website at: www.themortgagehouse.com or call her at 1-800-305-9731. This article is a forum to explore real estate principles. It is not intended to provide tax, legal, insurance or investment advice and should not be relied upon for any of these purposes.