If you think you can refinance and are facing foreclosure due to your negative equity in your home, think again, there might be hope just yet. Fannie Mae and Freddie Mac needed some help so the government designed a program called Making Homes Affordable to help solve the problem. In order to help those who had a negative equity position in their home the program changed the guidelines to allow for mortgage refinances.
If you didn’t know, Fannie Mae and Freddie Mac were struggling. They insure mortgages and when the real estate market fell apart they really struggled. This program has really allowed them to get back on their feet and now it’s the homeowners out there who need an upside down mortgage refinance that need to take action.
If you were one of the unlucky people who refinanced for cash out of your property, purchased a new home or took out a line of credit in the past few years then odds are you have negative equity. This means you owe more on your home then your home is currently worth. You might have taken out an adjustable rate mortgage and its about to adjust and a refinance could really help you keep the payments down. On top of that, interest rates at 5% for mortgage refinances are making homeowners look at refinancing due to the potential savings.
If your current home has negative equity then look for a refinance? Well you might be in luck and get the government’s Government’s program for upside down mortgages to work for you.
Here are some basic rules to negative equity mortgage refinances:
1. The maximum LTV or loan-to-value is 125% of the current value excluding the second or the first only.
2. You may have to qualify with your existing lender depending on your circumstances.
3. To allow a refinance on two separate mortgages you would need a subordination agreement from the second mortgage company.
4. Refinancing due to negative equity on a loan that currently has mortgage insurance will create an issue for you.
5. You will need to use the loan look up features at Fannie Mae or Freddie Mac’s sites to see if you are actually insured by these mortgage companies.
Those top five reasons should be enough to make you dangerous when attempting to help with negative equity mortgage. The process is not exactly easy these days but the outcome will be worth it to you once you see that your payment is lower and life is a little more manageable. You can make great things happen if you find a knowledgeable mortgage professional.
