“Life is always about waiting for the right moment to act.” – Paulo Coelho
Are you playing the waiting game? Waiting for your home value to rise? If you owe more on your home than what it’s currently worth, you're probably wishing you could refinance your mortgage for a lower interest rate. With this topic in mind, you may be interested in an update on a federal refinance program that we here at MilitaryByOwner have been tracking.
For an eligible homeowner, the Home Affordable Refinance Program (HARP) has eased refinancing concerns. The government’s independent regulatory agency for housing, the Federal Housing Finance Agency (FHFA), set up this blueprint in 2009. This plan is a plus for the dedicated owner who is making their mortgage payment each month. Even if that loyal bill payer has less than 5% equity in their property, with this initiative the borrower could qualify for refinancing.
This September, the current way the HARP program is set up will come to a close. However, according to the HARP website, October 2017 will usher in a new avenue for mortgage assistance. Fannie Mae’s High Loan-to-Value Finance Option and the Enhanced Relief Refinance strategy from Freddie Mac are key elements in the upcoming FHFA Streamline Refinance Program.
If a mortgage is backed by either Fannie or Freddie (government-sponsored enterprises), the loan may be eligible for modification. The overall goal of this renewed refinancing program is to keep a person in their home, preventing foreclosure.
Curious how the new Streamline Refinance Program differs from HARP? Although the details are still subject to change, the following are some projected points.
No expiration date.
No matter what ups and downs the real estate market might bring, the new Streamline Refinance Program will continue with no worries over a cut-off date.
Not limited by a “start” date.
In the soon to be closed HARP program, an applicant must have purchased their home prior to May 31, 2009. This new Streamline Refinance blueprint sets no defined time frame for when the home loan was initiated.
Can be used more than once.
According to the terms of the new Streamline Refinance offering, if a householder is underwater with a home loan again, they can apply for refinance assistance a time or two more. However, a proprietor who has used the existing HARP program can’t further apply for refinancing.
When placing an application, the property holder must have:
- Paid their mortgage on time for the last 6 months
- Not missed a payment more than 1 time in the last 12 months
- A steady source of income.
- Lower monthly principal and interest payment
- Lower interest rate
- Shorter loan term
- Differing types of mortgage, such as going from an adjustable rate to a fixed rate.
These baseline qualifications for the owner are carried over from HARP to the new Streamlined Refinance outline.
Since October is still several months away, a homeowner could currently apply for refinance assistance if they meet the HARP program terms. As FHFA Public Affairs explains,
To ensure that high LTV (Loan-to-Value) borrowers who are eligible for HARP will not be without a refinance option while the new refinance offering is being implemented, FHFA is creating a bridge to this future program by also directing the Enterprises (Fannie Mae or Freddie Mac) to extend HARP through September 30, 2017.
It’s a good idea to do a little research and be aware of the options available to you while diligently waiting for home prices to rise. For example, if you hold a VA Loan, the Interest Rate Reduction Refinance Loan (IRRRL) program could offer a window of hope for your refinancing needs. For further details, discuss with your lender which refinancing strategy might ease your mortgage situation.
Note: Links are provided for reference and do not constitute legal advice. Be sure to check your particular state's guidelines and laws when looking to refinance your mortgage.
