As homeowners continue to suffer with mortgages that are bigger than the actual value of their home they can now refinance their current mortgage for one that's more affordable by taking advantage of a new refinance provision that's part of the governments Making Home Affordable plan.
Borrower's, who have mortgages through Fannie Mae or Freddie Mac, who are current on all their mortgage payments may be eligible to refinance their current mortgages into new guaranteed loans who owe up to 125 percent of the home's current market value which used to be limited to those whose loan-to-value limit was only 105 percent.
This new provision to refinance will help home-owners keep their homes and avoid foreclosure and even if the current mortgage does not have mortgage insurance, the new loan will be able to have it without any added cost since loans through both Fannie Mae and Freddie Mac usually require mortgage insurance when the loan is more than 80 percent of the home's value.
If there's a second mortgage that's tied to the first and combined they exceed the 125 percent limit they may not apply for the refinancing program and furthermore the new provision does not allow homeowners to take cash out of their mortgage.
Currently, qualified borrowers who are eligible for the higher loan-to-value ratio refinancing may only apply through their existing servicer. However, after October 1st homeowner's can refinance through any Fannie or Freddie lender.
So, in order to see if you are eligible for refinancing under the new provision, go to www.chamberofcommerce.org/affordable-housing-resources