The Home Affordable Refinance Program: Intro

June 28, 2012 by  Filed under: Loans 

Underwater mortgage borrowers can get financial assistance from the US federal government so they can possibly avoid getting into default. The Home Affordable Refinance Program was set up by the Federal Housing Agency to help troubled home loan borrowers to refinance their current mortgages.

The program should not be mistaken for the Home Affordable Modification Program, which in turn is aimed at assisting troubled homeowners to prevent possible foreclosure. The Home Affordable Refinance Program is directed at borrowers who are currently on monthly home loan payments but at the same time are unable to get refinancing due to reducing home prices, especially as the local housing market still undergoes its needed correction.

Since 2009 when the Home Affordable Refinance Program was established, it has already helped numerous homeowners. According to actual figures, the program has catered to about 10% of the targeted 5 million mortgage borrowers across the country. Some skeptics assert that it has yet to reach a significant number of targeted homeowners.

During the last quarter of 2011, several modifications were made to make the Home Affordable Refinance Program more helpful. Enhancements to the program were aimed at allowing more homeowners to qualify for it especially those who are not presently eligible to get into it. Specific changes were made to lower fees for borrowers particularly those who intend to refinance through short-term mortgages. The changes also eliminated the limit that practically prevents real ‘underwater’ borrowers who owe about 125% of their property value.

To be eligible for the Home Affordable Refinance Program, a borrower should have a home loan that is guaranteed or owned by the government-sponsored Freddie Mac or Fannie Mae. If the mortgages were not originally owned by either of the two institutions, those should have been sold to the agencies by May 31, 2009. A borrower can always check if his mortgage is already owned by any of the two agencies.

The present loan-to-value ratio of the mortgage should be above 80%. An applicant owning a mortgage that was already refinanced under the Home Affordable Refinance Program will not qualify anymore. Lastly, borrowers should not have missed any home loan payment during the last six months. They should also not have missed more than one payment during the last 12 months.

Qualifying mortgage borrowers and homeowners should not hesitate to immediately apply for the program. The Home Affordable Refinance Program is available through selected lenders that have been approved to carry and offer the government-assisted refinances. Mortgage borrowers should not wait because the program is not effective for a long time. It is set to end by December 31, 2013. It is expected to help numerous responsible homeowners to save more than $3,000 per year on their home loans.

I’m a loan advisor specializing in home affordable refinance programs.

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