Your Negative Equity Mortgage Refinance and The Making Homes Affordable Program

Posted on October 23, 2009
Filed Under Unemployment Will Cause The Most Foreclosures In 2009! |

If you are facing the possibility of losing your home to foreclosure because you have negative equity and would like to refinance but think you can’t will think again. Fannie Mae and Freddie Mac needed some help so the government designed a program called Making Homes Affordable to help solve the problem.  This program allowed for the guidelines to change on mortgage refinances in order to help those who had a negative equity position in their home.

Fannie Mae and Freddie Mace were struggling if you didn’t know.  They insure mortgages and when the real estate market fell apart they really struggled.  This program has really allowed them to get back on their feet and now it’s the homeowners out there who need an upside down mortgage refinance that need to take action.

If you were one of the unlucky people who refinanced for cash out of your property, purchased a new home or took out a line of credit in the past few years then odds are you have negative equity.  This means you owe more on your home then your home is currently worth. If you have an adjustable rate mortgage that is about to adjust a mortgage refinance could really be useful. With interest rates on mortgage near the 5% range refinancing is very important to many homeowners.

If your current home has negative equity then look for a refinance? Well you might be in luck and get the government’s Making Homes Affordable program to work for you.

Here are some basic rules to negative equity mortgage refinances:

1. You can only have a loan-to-value of 125% max.

2. Depending on your circumstances you may have to qualify with your existing lender.

3. To allow a refinance on two separate mortgages you would need a subordination agreement from the second mortgage company.

4. Refinancing due to negative equity on a loan that currently has mortgage insurance will create an issue for you.

5. Not all loans are serviced or insured by Fannie Mae or Freddie Mac so find use their loan look up features to determine your status.

Those top five reasons should be enough to make you dangerous when attempting to help with negative equity mortgage.  The process is not exactly easy these days but the outcome will be worth it to you once you see that your payment is lower and life is a little more manageable. Only the most knowledgeable of mortgage professionals can help you through this so choose wisely.

 

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