Top government programs to help refinance your home and how to see if you qualify


Top government programs to help refinance your home and how to see if you qualifyThere is a Home Affordable Refinance program of the federal government that helps homeowners to refinance their homes. Refinance mortgages using this program is only applicable if the money owed is a little more than what the current value of the home is. It is a complex program which needs to be simplified if you have to understand your eligibility.

The Home Affordable Refinance program has a stringent set of rules. The intention is to assist homeowners who have good credit. When the value of a property depreciates or decreases, the mortgages must be available at reduced interest rate or a fixed low rate to benefit the homeowners. This program is specifically for mortgages regulated by Fannie Mae and Freddie Mac. Let us find out if you will qualify.

  • As a borrower, you must be the owner and the occupant of the said detached house. It could be a condominium, four-unit residential property, duplex or triplex.
  • The maximum delay in repayment of a particular installment should not be more than thirty days in the last twelve months. Those who have had longer delays in any one repayment in the last twelve months or less if the mortgage is less than a year old, then the Home Affordable Modification program is the more relevant option.
  • The first mortgage, also the new mortgage, should not be more than 125% of the present market value of the house. Should the borrower or homeowner have another loan, then that doesn’t get factored into the 125% limit.
  • There are specific rules governing the ability of the borrower to take cash out of the refinance to repay other debts. From finance closing costs to using cash for specific payments, the rules are applicable in every instance of using the money obtained through the refinancing program.
  • The new rate of interest on the refinance or new mortgage will be according to the prevailing rates in the market. These rates will vary across lenders. There may be refinancing costs and additional fees for the borrower to bear.

It is obvious that the homeowner should satiate the income requirement to be eligible for the repayments. The loan value will be the principal determiner in this case. The new mortgage will not have any balloon payment or prepayment penalty. The existing loan or the balances of the existing mortgage will not be impacted. If you have private insurance for the mortgage you have now, then that will still be applicable on the new mortgage. If you don’t have any such insurance, then you are not obligated to get one for the refinance or the new mortgage.

Presently, there are fifteen lenders that are offering refinancing under the program. More lenders are expected to join in months to come. This may appear to be a complicated program but it is beneficial for first time homebuyers and even those who have had a mortgage for many years now.

The requisites for application are paycheck stubs or proof of income, latest income tax return, information pertaining to other loans, account balances including monthly minimum payments on existing loans, debts and credit cards as well as the filled self-assessment questionnaire.