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Tips For Refinancing An Underwater Mortgage

Mortgage rates are at historic lows and seem poised to stay there for some time to come. If you have a mortgage, now is a great time to refinance. Refinancing your mortgage can be difficult if you find yourself owing more more than your home is currently worth, also known as being underwater on your mortgage. There are two programs available to help people in this situation.

Home Affordable Refinance Program

The first is HARP (Home Affordable Refinance Program). With this program you can refinance with the potential of getting a lower rate or shorter term loan. The lower rate may reduce your payments significantly. This program was recently changed to eliminate the loan-to-value ratio (your balance divided by the market value of your home). Despite this limit having been eliminated according to the governmental regulations ruling the program, many lenders still use a loan-to-value limit of 150%. There are a few basic rules guiding who qualifies for this program. You can not have made any late payments during the past six months and a maximum of one late payment in the past 12 months. You will probably be charged a slightly higher than prime interest rate, but only by a quarter percent or so. You will have to pay closing costs as with any refi. Additionally, your loan must have been owned by Fannie Mae or Freddie Mac prior to June 1, 2009. You can see if one of these companies serviced your loan, and when, by going to  www.fanniemae.com/loanlookup or www.freddiemac.com/mymortgage. If you prefer to call, give Fannie Mae a buzz at 800-732-6643 or Freddie Mac at 800-373-3343.

FHA Streamline

The other program is designed for people who have FHA loans. Streamline FHA may enable you to reduce your monthly payment or shed that adjustable rate mortgage (ARM) for a fixed rate. There are several guidelines to be followed with this program. You can look them over at hud.gov ( http://portal.hud.gov/hudportal/HUD?src=/federal_housing_administration). Some of the highlights include: your current FHA loan has to be at least 210 days old and you have to have made a minimum of six payments, if the loan is less than one year old, you can not have made any late payments, and the refi must reduce your monthly payment (principal, interest and mortgage insurance) by at least 5 percent. The process has been streamlined in that the appraisal, verification of employment, and income or credit score requirements have been waived.
Hopefully one of these programs will be able to help you.

This informative article has been provided by the team at CarLoansLouisiana.com.  We help people get approved for financing, despite credit problems of all kinds.


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