Can I refinance my loan if I owe more than my house is worth?

I got an email from, Robert Hager, a local mortgage lender that answers this common question from property owners. see below. You can also see if your loan qualifies for a HARP refinance by going here.

Can a homeowner refinance their loan if they have little or no equity?  The long answer is complicated, but the short answer is, it depends mostly upon the type of loan you currently have.  The differences are below.  If your current loan is:

• ·        FHA – You can “streamline” refinance without an appraisal as long as the new balance does not exceed the original balance – for most people this means they need to have had the loan about 1 ½ years.  Please note, FHA monthly MIP doubled in April 2011 so your current rate in most cases should exceed 5% for the refinance to be cost-effective
• ·        VHDA – No programs available (need to switch to 2.25% equity FHA or 5% conventional)
• ·        USDA – No programs available (need to switch to 2.25% equity FHA or 5% conventional)
• ·        VA – Interest Rate Reduction (IRR) available without an appraisal in many cases
• ·        CONVENTIONAL – If your loan is currently “owned” by Fannie Mae or Freddie Mac (most loans are, regardless of servicer) and obtained prior to April 2009, programs are available under the government’s Home Affordable Refinance Program (HARP).  Please see the following link http://www.makinghomeaffordable.gov/get-assistance/loan-look-up/Pages/default.aspx to check who owns your loan.  Borrowers can also avoid PMI in situations where they initially put 20% down, but their house value has since fallen.  Rates are typically higher with loan-to-values above 95%.  Please call/email for details

CURRENT RATES:

Conforming 30 Year Fixed

• ·        4.250%       0+0                                 APR  4.341%
• ·        4.625%       No Closing Costs            APR  4.601%

Conforming 15 Year Fixed

• 3.625%       0+0                                 APR  3.754%
• 4.125%       No Closing Costs            APR  4.119%

FHA 30 Year Fixed

• ·        3.875%       0+0                                 APR  4.601 %