Question:
We refinanced our home with Fannie Mae in December 2009, but now that the rates are at an all-time low, we would like to refinance again to get a better rate. However, we were told we could not, since our first refinance was after June 2009. If we knew this stipulation, we would not have refinanced at the time. We owe $268,000, which is about as much as our home is worth. We seem to be stuck with no way out! Any suggestions would be helpful.
Answer:
It looks like you have insufficient equity to refinance under conventional standards and may well owe more than the property is worth. Your next option would be the Home Affordable Refinance Program, but there are two time-related requirements that you do not meet.
First, the mortgage must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.
Second, the mortgage cannot have been refinanced under HARP previously – unless it is a Fannie Mae loan that was refinanced from March to May 2009.
Instead, try contacting your state attorney general to see if any programs on the state level can help.
Alternatively, if possible, you could raise enough cash equal to 3.5 percent of the property's appraised value and refinance with an FHA loan. Then you could save perhaps $200 a month for a loan of equal size, depending on the final terms.
With that said, your situation illustrates a major problem. You cannot refinance because you lack equity, despite being on time with your mortgage payments. It would help you – and the economy – if homeowners like you could refinance at a lower rate, and thus have more disposable income to spend in your community.
The government has allocated $45.6 billion in stimulus funding for “housing support programs,” but as of last October, only $5.5 billion was actually spent. Given that mortgage rates are near historic lows, there is a unique opportunity to assist millions of homeowners who have faithfully paid their mortgages.
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