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You May Be Able To Refinance Your Home, Even With Little Or No Equity!

January 9, 2012 · 15 comments

in Home & Garden, Personal Finance

Recently, I wrote about how we had refinanced our home through ING Direct. In our case, we had enough equity in our home to do a standard refinance.  (Unfortunately, not everyone does.)

Those that do not have 20 percent equity in their homes may still be able to refinance though through the federal  Home Affordable Refinance Program (HARP).  The catch is, the mortgage must be backed by Sallie Mae or Freddie Mac.  However, not everyone knows if their mortgage is backed by Fannie or Freddie, and probably assume it is not.  (Bad assumption.)

How To Find Out if Sallie Mae or Freddie Mac Back Your Mortgage

You can either call or check online to see if your home is guaranteed by Fannie or Freddie.  It is really easy to check, and you don’t even need your account number:

Fannie Mae: 1-800-7-FANNIE or www.fanniemae.com/loanlookup
Freddie Mac: 1-800-FREDDIE or www.freddiemac.com/mymortgage

If your mortgage is owned by one of the agencies, there are still other qualifications that must be met.  A few examples are as follows:

*Home must have been sold to Fannie or Freddie on or before October 31, 2009.
*Timely payments must have been made on the property for the last 12 months.
*Your mortgage servicer must participate in the HARP program.

Additional Notes About Refinancing Through HARP

*Fees may still apply when refinancing.  However, it is possible that you will not need an appraisal.

*At this time, the program is only available until December, 2013.

*If you do decide to refinance, really think about the loan term you want to agree to.  Maybe consider taking a 15 year loan instead of 30 year if your monthly payment will be dropping because of the reduced interest rate.

*If you find that your mortgage is guaranteed by Fannie or Freddie, call your mortgage servicer to get more details and possibly initiate the process.

So, if you are frustrated with how high your interest rate is and wish you could lower it, click on the links above and see if maybe your mortgage is actually backed by Freddie/Fannie.  It only takes a minute to check, and it may just end up saving you hundreds of dollars a month if you actually are eligible for the program.

If you have actually refinanced or tried to finance through HARP (or want to discuss refinancing in general), please leave a comment!

 

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{ 14 comments… read them below or add one }

MoneyCone January 9, 2012 at 1:58 pm

Informative post Kris!

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Roshawn @ Watson Inc January 10, 2012 at 8:22 am

Great PSA. We all probably know people who need this, so thanks for sharing the info!!!!

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Kris January 10, 2012 at 8:44 am

People actually qualified for the program that I did not expect. There are a lot more people out there that have mortgage backed by the government than I realized. I remember when I bought my first house, it was through Freddie, but I couldn’t spend more than 100k. Things are a lot different now, and since people still pay their regular mortgage servicer, they don’t even realize that F/F guarantee the loan.

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Sherie January 10, 2012 at 8:52 pm

Please email this to Paul so he can take my name off mortgage!

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Kris January 11, 2012 at 5:46 pm

I will let you do that anonymously… 🙂 Your mortgage changed hands after 2009 anyway, didn’t it?

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Invest It Wisely January 10, 2012 at 9:07 pm

In Canada the mortgage will be up in 5 years anyways, but even for us it can sometimes be advantageous to refinance.

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Kris January 11, 2012 at 5:45 pm

Do you think you will stay longer than 5 years?

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Miss T @ Prairie Eco-Thrifter January 11, 2012 at 10:40 am

We have been looking into refinancing because interest rates are even lower than before. We just emailed our broker last week to look into it. If we find a good rate we will lock in for another 5 years.

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Kris January 11, 2012 at 5:43 pm

Do a lot of research, there can be a real difference in rates and terms between lenders, that is for sure.

Good luck, and let us know what you do.

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Christa January 11, 2012 at 5:58 pm

Great overview! When I worked in mortgage at a small-town bank, every loan we offered (besides a few special cases) were backed by Freddie Mac. No matter if we sold the loan to a big bank or kept it in house, good ol’ Freddie backed it. Tons of other banks work this way, too. So, lots of people who may not think they are backed probably are.

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Kris January 11, 2012 at 8:36 pm

Thanks Christa. I was also surprised by the amount of mortgages that are actually federally backed. I think people think because their mortgage is paid through Wells Fargo or some other bank that is not a Fannie or Freddie loan. But, as you know, that may not be the case!

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payday lenders online January 26, 2012 at 6:05 am

Basically, you have to determine if the fees and the time it takes to refinance your home is going to be worth the sum of money you would save. One thing is for sure, if you are in a financially right situation, you can greatly benefit from refinancing your mortgage loan. The best way to figure out whether you, in particular, are in exactly that situation, is by talking to soeialists and comparing mortgage rates-both of which you can do. Again, if your situation is correct, you can save a lot of money by refinancing your current home mortgage.

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Kris January 29, 2012 at 8:12 pm

You can for sure save money if you can reduce your rate enough to justify the closing costs!

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Speedy Loan Search September 29, 2012 at 2:04 am

Refinancing costs vary, and can range from $2,000 or less, to $20,000 or more, depending on factors like loan value and the amount of discount points associated with the loan. Borrowers should always be mindful of closing costs. Sometimes they may be tempted to pay a lot in points to get a lower rate, but this may not be the best way to go.

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