How to Refinance Your Mortgage Using The Government Relief Program

When you took our your mortgage did the mortgage broker tell you that you didn't need to worry about a balloon payment or an upward adjustment because you'd be able to refinance later? That used to be the case, but the rules of home refinancing have changed dramatically. Millions of people are finding that they cannot refinance. Instead, they are shocked to learn about the fine print in mortgage agreements which suddenly -- often over night -- make the mortgage unaffordable. Unaffordable mortgages fuel the foreclosure market, lower housing values for all of us, and destabilize the economy.

President Obama created a government program to help people in unaffordable mortgages so that they can stay in their homes. It is not a bail out, but it is a way that buyers with little or no equity in their homes can refinance into a more affordable mortgage. It is estimated that seven to nine million people may qualify for government assistance under a program known as HARP -- Home Affordable Refinance Program. You may qualify.

The program is meant to help people who are current on their mortgages to refinance so that they can get into a more affordable loan. Assistance is free.

Refinancing will not lower the principle amount you owe on your mortgage, but it should reduce the total amount that you pay over the life of the mortgage. The refinanced mortgage payments likely will be more affordable. You may be able to refinance to avoid an impending balloon payment on your current mortgage or an upward adjustment on an adjustable rate mortgage. You do not need a third party to help you determine whether you qualify for assistance. Here is how you can do it on your own.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Home Affordable Refinance application
• Information about the monthly gross (before tax) income of all the borrowers on your loan, including recent pay stubs if you receive them, or documentation of income you receive from other sources.
• Your most recent income tax return. Information about any junior lien mortgage on the house.
• Account balances and minimum monthly payments due on all of your credit cards.
• Account balances and monthly payments on all your other debts such as student loans and car loans.

1. Go to the government web site: www.MakingHomeAffordable.gov. If you qualify for the program the interest rate on your refinanced mortgage will be based on market rates in effect at the time of the refinance. You may be charged associated points and fees by your lender. The refinanced loan, however, must have no prepayment penalty or balloon payments.

2. Determine whether you are eligible under the mortgage refinance program by taking the on-line quiz or by continuing to read.

3. If you are current on your mortgage, meaning that you have not been more than 30 days late in the last 12 months, you may qualify for mortgage loan refinancing if your loan is owned or guaranteed by Fannie Mae or Freddie Mac. To find out call your mortgage lender or servicer (the organization to whom you make your monthly mortgage payments) and ask.
   
   The other option is to call Fannie Mae at 1-800-7FANNIE and Freddie Mac at 1-800-FREDDIE or visit their web sites at www.fanniemae.com/loanlookup and www.freddiemac.com/mymortgage. Enter your information to determine if either owns or guaranteed your mortgage loan.

4. If your loan is owned or guaranteed by Fannie Mae or Freddie Mac then you'll need to show that you have a reasonable ability to pay the new refinanced mortgage payments and that the refinance will improve your long term affordability or stability of your loan. Ask your lender for a "Good Faith Estimate" and a Truth in Lending Statement. These two disclosure forms will show the new interest rate, mortgage payment, and the amount you will pay over the life of the loan. Compare this to your current loan terms.

5. Finally, you will need to verify that the amount you owe on your first mortgage loan does not exceed 125 percent of the current market value of your property. The current market value of your property will be determined after you apply to refinance.

6. If you qualify then call your mortgage lender and ask for a Home Affordable Refinance application. The program expires in June 2010. Your refinance must be complete by June 10th. To apply you will need:
   
   * Information about the monthly gross (before tax) income of all the borrowers on your loan, including recent pay stubs if you receive them, or documentation of income you receive from other sources.
   * Your most recent income tax return.
   Information about any junior lien mortgage on the house.
   * Account balances and minimum monthly payments due on all of your credit cards.
   * Account balances and monthly payments on all your other debts such as student loans and car loans.

7. For more information or to speak to a government housing counselor call 1-888-995-HOPE.

Tips & Warnings

• Do not pay to find out whether you qualify for help.
• Do not transfer the deed to your house to anyone.
• Do not give a mortgage payment to anyone other than your lender.

Resources

• To learn about the government loan modification program click here.
• This link takes you to the official government web site
• Click on this link to view other recommended resources

[jenbeth]

on 9/5/2009 Useful advice, thanks.