Stimulus Mortgage Refinancing Facts

From LoveToKnow Mortgage

If you need to lower your mortgage interest rates, check out these stimulus mortgage refinancing facts to see if you qualify for the special refinancing program offered under the federal Making Home Affordable program.

Consider all types of home loans when you refinance.

Stimulus Package Mortgage Refinancing

Creative home mortgage financing has caused many families to face rising interest rates on mortgage loans. In some cases, the new rates are resulting in monthly mortgage payments which the homeowners cannot afford.

Some of these families did not realize how the changes in their mortgage loan would affect their monthly mortgage payment. Other families knew what their rising rates would do to their mortgage payment; however, they had planned to refinance their rising rate mortgage loans when the interest rates on new loans started to decrease.

In early 2009 home mortgage interest rates started to fall. Typically, this would be a good time for homeowners with increasing interest rates to refinance. Unfortunately, the homeowners with the rising interest rates found the market value of their homes decreasing as the number of foreclosures in their market area increased. Many homeowners continued to make their monthly payments based on the high interest rates but were not able to refinance since they no longer held enough equity in their homes to refinance.

In March 2009, the Making Home Affordable program was introduced as part of the federal stimulus package. This program included help for homeowners to modify their existing home loans and to refinance their mortgages into new, lower interest rate home loans.

The Stimulus Mortgage Refinancing Facts

The refinancing portion of the Making Home Affordable program was specially-designed to help homeowners who are:

Current on their mortgage payments
Unable to refinance because their home value has decreased

Homeowner Eligibility

Owns a one, two, three or four-unit home
Homeowner occupies the home
Has a fixed or adjustable rate home mortgage that is owned or guaranteed by either Fannie Mae or Freddie Mac. A homeowner can look up their loan by checking the Fannie Mae or Freddie Mac websites.
Is current on their mortgage payments and has not had a 30-day late payment within the last twelve months.
Has a first mortgage that is no more than 105 percent of the value of their home. For example, their mortgage is $210,000 or less on a home with a current market value of $200,000.
If they have a second mortgage, the lender who holds the second mortgage agrees to stay in the second position.
Has enough income to pay the monthly mortgage payment on the newly-refinanced mortgage loan.

Process

The homeowners determine if they quality for the special stimulus mortgage refinancing program by talking with their home lender or their loan servicer. They can also get qualification information by speaking with a counselor at any of the Department of Housing and Urban Development (HUD)-approved housing counseling agencies. These non-profit agencies offer specially-trained housing counselors at no cost to homeowners.
The homeowners work with their lender or loan servicer or any Fannie Mae approved lender. The lender would suggest a new loan and prepare a "Good Faith Estimate" which includes the:
- New interest rate
- New mortgage payment
- Amount the homeowner would pay over the life of the loan
The new interest rate is based on the market interest rate when the refinance is approved.
Any point and fees involved in the new mortgage loan would be determined by the new lender.
The refinancing transaction must be funded prior to June 10, 2010 when the program expires.

Avoid the Scams

You should never pay a fee for assistance or information about the Making Home Affordable program. You can receive stimulus mortgage refinancing facts and information about the program at no cost from lenders, lending servicers and HUD-approved counseling agencies.