A Manageable Mortgage
Something I am sure you have not heard lately is: Good News with your home mortgage. Government backed money is now available that could really help the average person out. Interest rates are at historic lows and it is a great time to refinance your home, which could save you a substantial amount of money each month.
What do you need to do?
That all depends on which category you fall in. Outlined in this article are the three different categories. Depending on which you are in you have one of three refinancing scenarios.
Good Credit, 20% or more equity in your home
If you fall in this scenario, you will fly through the process. If you have managed to keep your credit in good standings throughout these hard economic times, it could really pay off for you here. You are the premium borrow that all of the lending agencies are so desperately seeking right now.
You should call a few different lending agencies, starting with the financial company that currently has your mortgage and talk to them about the interest rates available. You should not just take your current lenders rate though. Since it is free to shop around and will only take a few hours of your time, you should call a few lending companies and get them competing for your business. If your credit is good, you are in prime position to really improve your current mortgage.
Experts say that it is worth refinancing if you can get 0.8 percent interest decrease or better. The long you have left on your mortgage, the more sense it makes to refinance at the lower rate. There are several mortgage calculators available free online where you can determine where the break even point is for you and what interest rate would be best for your particular situation.
Current on payments, but less than 20% Equity
This scenario is more difficult than the first one to qualify for, but worth looking into if you fall in this category. You will have to qualify for this scenario based on some very black and white prequalification’s. These prequalification’s include:
· You must have a conforming loan (most cases $417,000 or less)
· The loan must be owned or guaranteed by Fannie Mae or Freddy Mac
· You must have taken the loan out on or before January 1, 2009
To find out if you qualify for this option, contact your lender. If your loan is owned by Fannie Mae, you will have to pay 100% of the closing costs to refinance, but lenders will allow you to roll that up in the mortgage many times. If it is Freddy Mac, lenders are allowing up to $2,500 of the closing costs to be refinanced.
You are struggling making your payments Many Americans fall into this category and you could be a candidate for the Making Home Affordable Loan. Whatever your situation is, you are urged to contact your lender to discuss this possibility.
It doesn’t matter if your loan is owned by Fannie Mae or not. Any lender can participate in this program. The goal of this scenario is to modify your loan so that it is less than or equal to 31 percent of your gross monthly income. Your lender may forgo a portion of your loan or modify your loan and reduce the payments for up to 5 years making it more affordable. If you fall into this category, please contact your lender and see if any options like this are available to you. This scenario has nothing to do with your credit score and anyone that meets the prequalification’s could be eligible for it.
