How to Refinance a Mortgage With Stimulus Money
It's no simple task for many homeowners to refinance their mortgage loans today. That's because their homes have lost value since they purchased them. Many owners have negative equity in their homes, meaning that they owe more on their mortgages than what their homes are worth. Because most mortgage lenders won't approve homeowners for refinances if they have less than 20 percent equity in their homes, these owners will struggle to nab a refinance. They can, though, rely on government stimulus money, in the form of the federal Home Affordable Refinance Program, to gain a refinance. This program allows qualifying homeowners to refinance their mortgages even if they owe up to 125 percent of their home's value on their mortgage loan. If you need to refinance your mortgage with the assistance of stimulus money, start by studying the basics of the government refinance plan.
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Instructions
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Study the requirements of the government's Home Affordable Refinance Program. You'll need to own a property with no more than four living units, be current on your monthly mortgage payments and have a loan owned or serviced by Fannie Mae or Freddie Mac to participate in the government program.
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Call your existing mortgage lender to ask about a government-assisted refinance. Unlike with standard mortgage refinances, you can't shop around with different lenders. You'll have to work with the lender to whom you are currently sending your mortgage payments.
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Give your OK for a home appraisal and a credit check. An appraiser will determine the current market value of your home. For the Home Affordable Refinance Program, your home's value must be high enough so that you don't owe more than 125 percent of its value. You must also have a high enough credit score to qualify for the low interest rates that make a refinance worthwhile. Most lenders reserve their best interest rates for consumers wtih credit scores of 750 or higher.
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Sign any closing documents sent to you by your lender, if your lender approves your request for a refinance. By signing these documents, you'll make your refinance official.
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