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New Refinance Guidelines

By
Real Estate Agent with Gina McKinley Group LLC

The federal government's new eligibility requirements for its home-loan refinancing program should allow more Arizonans to reduce their monthly mortgage payments.

However, the program still doesn't solve the biggest problem for so many borrowers: owing much more than their homes are worth. 

This week, the U.S. Department of Housing and Urban Development extended the Home Affordable Refinance Program to borrowers who are up to twenty-five percent upside-down on mortgages guaranteed by Fannie Mae and Freddie Mac.

 The previous origin was 105 percent, or owing 5 percent more than the value of the home.

 "As long as (the refinance loan) is at 4.5 to 5 percent and there are not a lot of hidden costs, it can be worth it," said Bill Austin, a loan-modification expert with local business news and information site East Valley Living and former president of the Arizona Foreclosure-Prevention Task Force.

 Bill also added that no federal program is going to help Phoenix-area residents who bought right after the housing market boom in mid-2006 and have seen their home's value decrease more than 50 percent. "You could spend years paying interest, payments and taxes and then end up with zero," he said.

 HUD launched the taxpayer-subsidized loan-refinancing program as part of a broader foreclosure-prevention effort called Making Home Affordable. Making Home Affordable was first introduced by President Barack Obama during a February visit to Dobson High School in Mesa.

 Under Making Home Affordable, two options are available to those eligible borrowers: They can refinance it; or modify their loan by lowering the interest rate, extending the loan's duration or reducing the principal.

 An estimated 200,000 of the 4 million to 5 million Americans struggling to save their homes have enrolled in the program, HUD says. About 10 percent, or 20,000, are refinancing.

Eligible borrowers for this program include only those who have not missed a payment by more than 30 days during the past year, and their mortgages must be backed by the government-sponsored lending giants. A preliminary report on how effective Making Home Affordable has been is due out in late July.

Historically, Fannie and Freddie have not allowed refinancing for borrowers who owe more than 80 percent of their home's value.

Fannie and Freddie loans constitute about 50 percent of outstanding mortgages in the U.S. and about 20 percent of all "seriously delinquent" loans, on which no payment has been made in the past two months.

 

If You Have Any Questions In Regards To The Making Home Affordable Program, Short Sales, Foreclosures, Property Values Or Any Other Real Estate Related Topic, Please Call Me, Gina McKinley, ABR, CDPE, CRS, at 480-355-8645. As A Certified Distressed Property Expert, I Can Provide You With Information Other Real Estate Agents May Not Be Able To Provide You!

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