Refinancing for homes under water?

If you owe more than your home is worth, you may have already resigned yourself to sitting on the sidelines wishing you could lower your rate but believing you don't stand a chance. Truth is, you may be able to take advantage of low interest rates even if your house looks something like... 

If you have an FHA insured loan, you may be able to refinance and lower your payment regardless of how much (or how little) the home is worth and how much you owe. You see, FHA has what is called a Streamlined Refinance without Appraisal. This means an appraisal is not required and current values won't keep you from saving $$. This not only gets you over the value hump, but will save hundreds of dollars in closing costs as well since an appraisal isn't needed.

Another advantage of a streamline refinance is that income isn't verified. If you, like so many others, have experienced the economy's back lash and aren't making as much as you were when you originally qualified for the home, it won't preclude you from qualifying. You will, however need to be employed.

More good news is that in many cases, you may be able to refinance without any closing costs out of pocket. Depending on loan amount and market conditions, a lender credit covering some, most or all of your closing costs and pre-paids may be possible. In some cases, you may also be able to ‘skip a payment' at a time where a little cash flow might be helpful.

Some of the basic requirements are: You will need to have made at least 6 payments since your purchase or last refinance, have no more than one late payment (more than 30 days late) in the last 12 months, have a middle credit score of 640 or greater and your new payment will need to be at least 5% lower than your current payment.

For those of you who do not have an FHA loan, there may still be an option for you as well.

First go to http://www.fanniemae.com/loanlookup/ or https://ww3.freddiemac.com/corporate/ to determine if Fannie Mae or Freddie Mac own your loan. If they do, you may be eligible to borrow up to 105% of the homes current value in order to take advantage of today's low rates. Once you have done that and have determine one of them does own your loan, contact your loan professional for the next step