How to Refinance Underwater Mortgages
by Ines L. from Excelsior, Minnesota
Ask Kate how to refinance underwater mortgages with HARP 2, HAMP loan modification, FHA short refinance, and FHA streamline refinancing: Thousands of homeowners with good credit and timely mortgage payments are still unable to refinance with blockbuster HARP interest rates. Ines asks how she can qualify for affordable monthly house payments in spite of underwater financing.
Ines asks Kate About Refinancing Her Underwater Mortgage
Because we refinanced our home on June 30, 2009, we were not eligible for the HARP loan. We are currently upside down on our mortgage.
We wanted to refinance because of the low interest rates and was hoping to get a 20 year loan. But because our house does not appraise high enough, no bank will lend to us.
We are current on our mortgage. And we have good credit. Is there any program out there that we might be able to qualify for? It is the appraisal that kills us.
Thank you, Ines
Kate Answers: How to Refinance Underwater Mortgages
In spite of lenient appraisal guidelines, Making Home Affordable has so many other requirements, it excludes many homeowners.
For example, HARP 2
will only refinance mortgages sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
To participate in the HAMP loan modification
plan, homeowners must have completed their current refinance on or before January 1, 2009.
This seldom understood rescue plan, FHA Short Refinancing
, does not impose cut-off dates. However it cannot be used to refinance underwater Fannie Mae, Freddie Mac, and Federal Housing Administration (FHA) financing. The same holds true for United States Department of Agriculture (USDA) and Veteran Administration (VA) guaranteed home loans.
FHA Streamline Refinancing
On the flip side, if a mortgage is not
currently insured by FHA, FHA streamline refinancing
, which often does not require an appraisal, is not an underwater homeowner option either.
President Obama HARP 3 Refinance Proposal
Bottom line? Many homeowners, just like you, are excluded from taking advantage of today's low mortgage rates.
This is why President Obama, followed by various members of Congress, proposed a new generation of the Making Home Affordable Refinance Program version 3
. As it is being currently discussed, HARP 3 would not
exclude homeowners from refinancing an underwater mortgage based on the type of existing financing.
But sadly, HARP 3 news is scarce since the last proposal, Rebuilding American Homeownership
by Oregon’s Senator Jeff Merkley.
Proactive Plan of Action to Affordable Homeownership
So how are you going to qualify for affordable house payments? Here's your 2-step plan for affordable homeownership.
- Write your elected officials: We know Washington D.C. represents the people, including homeowners with upside down financing. So write the President, Senators, and Representatives in the House. Tell them what you need and expect as a voting and tax paying underwater homeowner. Give them details. The squeaky wheel gets the oil!
- Pay off your mortgage early: Am I serious? Yes! Imagine for a moment you never need to make another house payment. What if you never again owe the bank even one penny? This is why I recently wrote a book about getting out of debt. A little known technique, it's brilliant because you don't need to come up with extra money.
So don't be afraid that my plan to pay off your mortgage early will require you to sacrifice your lifestyle. It doesn't! That what makes it so brilliant!
Learn more about liberating yourself from the burden of debt at The Mortgage Freedom Project
Good luck and best wishes,
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