New government programs to help in refinancing

Appraisals have always been key to refinancing. Traditionally, the mortgage amount could not exceed the property’s current market value. Those with Adjustable Rate Mortgages stuck with unaffordable mortgage payments, or those tempted by historic low interest rates have good reason to want – or need – to refinance their loans. Luckily, the federal government has introduced programs to help.

The Obama Administration’s Home Affordable Refinance Program, launched early this year, allowed refinances for those whose first mortgage was as high as 105 percent of a comparable market analysis (CMV). A July expansion now allows participation by borrowers current on payments, but up to 125 percent “underwater.” This especially helps those in down markets, such as Las Vegas, where about two-thirds of current mortgage holders owe more than the worth of their homes. Nationwide, 4 to 5 million homeowners whose mortgages are owned or guaranteed by Fannie Mae or Freddie Mac might reach more affordable monthly payments through the program, which falls under the broader Making Home Affordable initiative.

Those with government-based Federal Housing Administration (FHA) loans also have new refinance opportunities thanks to the American Recovery and Reinvestment Act of 2009. The revised single-family loan limits now reflect the higher loan limits set by the Economic Stimulus Act of 2008 or the Housing and Economy Recovery Act of 2008, all determined by county or metropolitan area. Effective through the end of 2009, those limits range from $271,050 to $729,750 and permit FHA to insure loans on amounts up to 125 percent of the 2007 area median house prices. For more, see Government Programs Mean Easier Refi’s – WalletPop.