One of the first laws enacted by President Obama last year was the Economic Stimulus Package. One provision in the law has helped millions of borrowers refinance to today's historic low rates, even though their property has declined in value. Normally, if a property has less than 20% equity, mortgage insurance, or PMI is required to compensate for elevated risk. In 2009, the Home Affordable Refinance Program (HARP) was enacted which allows homeowners with Fannie Mae or Freddie Mac loans to refinance down to the prevailing low rate, even if their house has lost equity. A loan can be refinanced to today's rate even if the (current) property is as much as 105% of the loan amount.
For Example: Home Purchased for $400,000. 20% down, $320,000 mortgage. Since the original purchase, the property value has declined to a value of $305,000. Under the new law, the homeowner can still qualify to refinance the full $320,000 with NO PMI. Many underwriting guidelines are also relaxed, including debt ratios and appraisal requirements.
This program has saved countless homeowners hundreds of dollars per month and thousands of dollars per year. This program is scheduled to end in June of 2011. If you purchased a home in the past 5 years, you most likely fall into this category and will benefit by requesting a HARP refinance.
Qualifications and guidelines do exist, so call me to see if this program can help you save money.
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