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Refinancing in a Down Market

Posted On 2011 Jan 15
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(NewsUSA) – Falling home values are a cause for concern for millions of American homeowners, mortgage lenders and the federal government.

To help families dealing with lower home values and other personal crises, the Obama Administration announced the Making Home Affordable initiative that is designed to help between 7 million and 9 million Americans improve the affordability of their mortgage and prevent foreclosure.

Understand Your Options

There are several programs under the Making Home Affordable initiative. One of these is the Home Affordable Refinance Program (HARP). HARP is a refinance program for homeowners who are current on their mortgage payments, but unable to take advantage of the current low interest rates due to their home’s depressed value. The program is also designed to assist borrowers in changing from a risky loan, like a negatively amortizing adjustable, into a more stable 30-year fixed rate.

There are several eligibility requirements for the HARP program, however the most important one is that your loan be owned or guaranteed by either Fannie Mae or Freddie Mac, and you must work directly through your lender (the company that currently services your loan).

Borrowers interested in knowing if they qualify for a HARP refinance program must contact their lender. You can also obtain general information about HARP, as well as access links to determine whether your loan is Fannie Mae- or Freddie Mac-owned or guaranteed, from the Making Home Affordable web site: http://www.makinghomeaffordable.gov/loan_lookup.html.

Before your lender can make you an offer, you will need to fully document your income, which generally requires providing: your W-2s, recent bank statements and pay stubs. The PMI Mortgage Insurance Co. has a helpful

mortgage-assessment form at www.homesafepmi.com, where you can input the information your lender will likely require.

Given the backlog of requests, the process from phone call to decision may take 60 to 90 days. So, don’t be surprised if you don’t get an answer right away. And be sure to follow up frequently.

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