If you can do the qualification dance well enough today, you can get a mortgage refinance on your current loan for a mortgage rate as low as 2%. The government is willing to help you get your house payment as low as 1/3 of your gross income. You will have to do a little dance, but for 2% on your mortgage some people will do a lot of dance. Here is what the deal on this loan program is.
The program that I am speaking of is the Making Home Affordable program. This program only applies to the mortgages held by Freddie Mac and Fannie Mae. These are the giant mortgage holders that were taken over by the government about one year ago. They are cutting rates on mortgages to as low as 2% in an attempt to get the payment at or below 31 % of borrowers gross income.
the first thing to do, especially if you are not sure, is log on to both lenders web sites and see if they own your mortgage loan. Even if you had gotten the loan through your local bank, the loan may belong to one of the two lenders now. These two large loan holders purchase loans from banks all the time. There is a large portion of America’s mortgage loans that belong to Freddie or Fannie.
To find out if Freddie or Fannie owns your mortgage, you will need to visit both the lenders web sites and fill in the requested information about your residence and yourself. Remember, you may not know if either of the two agencies owns your loan. The bank that you received the loan from may still be servicing the loan even though Freddie or Fannie may own the loan. So you need to check no matter what you think. If they don’t own your mortgage, well, you don’t qualify.
To estimate if you qualify, figure the amount of your mortgage payment (including principle, interest, taxes and insurance) and figure what percentage this amount is of your gross income. There are two reasons you know that you have and excellent chance to qualify.
Two other ways you will qualify are; If you have an adjustable rate mortgage that has almost doubled in payment and mortgage loan rates. The second is if you qualified for your loan with household income and one of you lost a job or had a cut in hours worked.
To qualify, you have to convince the lender that you are in a tough place now but with the new mortgage, you will be fine and keep up on all payments. You will not qualify if you have a lot of money in the bank, you will not qualify if you have just a little bit of money in the bank. You will not qualify if you have a large amount of credit card debt, or high payments on car loans.
You cannot be in to bad of position ether, for example, you won’t qualify on unemployment income that is considered a 6 month income, and the requirement of employment is a strong chance of continued employment for 9 months or more.
While I was researching this topic, I came across an article that had a lender quoted as telling homeowners “if you want to get the banks attention, go delinquent a month or two.”
You can get help on finding out if you qualify for the program at the website for HUD or another non profit called Homeowner’s toolbox says they can estimate your chances of approval.
It’s a great time to be shopping for a house with exceptional mortgage loan rates available from reputable credit unions. For extra financial security, have a look at fixed GIC rate products.