House Underwater? New Refi Program announced!

Federal regulators, mainly FHFA on Monday unveiled a major overhaul of an underused mortgage-refinance program, HARP, designed to help millions of Americans whose home values and mortgages are underwater. Richmond real estate (see stats) has not been affected as bad as other regions, but many people’s homes are worth less than they owe. You can read the whole Wall Street Journal article here. But essentially the program will allow borrowers that have loans with Fannie Mae or Freddie Mac, to streamline refinance their homes to a lower interest rate. The program is targeting borrowers that purchased homes from 2004-2008 when rates were significantly higher than they are today. The main change is that the new guideline will allow borrowers that previously could not refinance, because the property was so severally underwater, to now refi.

What does this mean for you?

If you owe more than your house is worth and you have not been able to refinance because the property did not appraise, you may now be able to do so under the new guidelines announced today. More information will be coming out on Nov. 15th, but you can contact your lender and ask them if you are or will be eligible to refinance your loan. We recently had a client that was able to refinance a rental property to a rate that was much lower, than they had. The closing costs were minimal, and it reduced the mortgage payment by $200/month. The more expensive the home, the greater the potential savings.