I was just reminded today that the government is taking a lot of steps to make your home affordable. If you bought your home before the recession and are paying high mortgage rates, you might qualify for the government’s making home affordable programs.
My sister emailed me today after having some success investigating a loan modification for her home.
Here’s what she had to say:
We called my mortgage company yesterday to inquire about a loan modification (and I’ve been reading online about government assistance programs). I didn’t think we’d ever qualify since we don’t have an economic hardship or have missed any payments.
It turns out there are programs out there for people like us – current on our loan payments, have a house underwater, etc. We qualify for a program called HARP and our mortgage company participates in it. Basically, they are allowing us to refinance our house to a lower interest rate even though our house is underwater, without having to put more money into it (we don’t have to have 20% down payment on the current home value). The initial rate they offered us was 4.625% for a 30 yr fixed, 0 pts, $3000 closing costs, which is almost 1.5% less than our current rate, and will reduce our payments by over $500/mo.
They also have rates for 25 yr fixed, 20 yr fixed, etc. Your principle will remain the same. I’m going to shop around other lenders who offer HARP to see if I can get a better interest rate. You aren’t obligated to go with your current mortgage servicer. The only thing is, your current loan has to be backed by Fannie Mae or Freddie Mac. There does not seem to be a credit score minimum or an income minimum, but you will need to be able to afford the new refinance payments.
You can find out if your current loan is backed by Fannie or Freddie by going to this website:
Here’s the website for the different gov’t assistance programs:
Here’s a good blog I found on the current HARP changes:
A better program seems to be FHA-Short Refinancing program, where they will reduce your principle to 97% of the current home value AND give you a lower rate. But that one seems harder to get. Not all lenders will participate in that one. You’re only eligible for that one if your loan is NOT backed by Fannie or Freddie. I’m not sure what else makes you eligible – ?economic hardship?
Wish I knew about this back in 2009 when the program started. dang it! Maybe you should post it on Riches’ Corner.
This is awesome advice for anyone who is a homeowner. Interest rates are at all time lows. So, if you are able to refinance to a lower interest rate, it may be a huge money saving move for you.
With all the new programs for making your home affordable, you should definitely give your mortgage company a call and see if you have any options for lowering your payments.