Refinancing your Negative Equity Mortgage- Making Homes Affordable Program

If you think you can refinance and are facing foreclosure due to your negative equity in your home, think again, there might be hope just yet.  There is a government sponsored program called Making Homes Affordable that was set up to help struggling Fannie Mae and Freddie Mac. In order to help those who had a negative equity position in their home the program changed the guidelines to allow for mortgage refinances.

If you didn’t know, Fannie Mae and Freddie Mac were struggling. The real estate market fell apart and they insure mortgages so they struggled.  This program has really allowed them to get back on their feet and now it’s the homeowners out there who need an refinance an upside down mortgage that need to take action.

If you were one of the unlucky people who refinanced for cash out of your property, purchased a new home or took out a line of credit in the past few years then odds are you have negative equity. This means you home is currently worth less than you owe on your mortgage. If you have an adjustable rate mortgage that is about to adjust a mortgage refinance could really be useful. With interest rates on mortgage near the 5% range refinancing is very important to many homeowners.

If your current home has negative equity then look for a refinance? Well you might be in luck and get the government’s Making Homes Affordable program to work for you.

Here are some basic rules to negative equity mortgage refinances:

1. You can only have a loan-to-value of 125% max.

2. Depending on your circumstances you may have to qualify with your existing lender.

3. To allow a refinance on two separate mortgages you would need a subordination agreement from the second mortgage company.

4. Refinancing due to negative equity on a loan that currently has mortgage insurance will create an issue for you.

5. Not all loans are serviced or insured by Fannie Mae or Freddie Mac so find use their loan look up features to determine your status.

Those top five reasons should be enough to make you dangerous when attempting to help with negative equity mortgage. Lowering your payment and making life is the outcome but be prepared for some bumps in the road along the way.  Look for a knowledgeable mortgage professional to help you and great things will happen.