Ask The Money Coach

By Lynnette Khalfani-Cox, The Money Coach

If you are a homeowner in good standing with your mortgage, but you can’t seem to get refinancing because your home has lost equity in this declining economy, you might instead qualify to refinance your mortgage to something more affordable under the Home Affordable Refinance plan if you can answer yes to all of the following questions:

1. Current on your mortgage? If you haven’t been more than 30-days late on your mortgage payment in the last 12 months prior to applying to the program, then yes, you are considered current on your mortgage.
2. Owner-Occupant? If you live in the home as your primary residence or at least in one of the units of a property you own with four or less units, then yes, you are an owner-occupant.
3. You owe about what your property is worth? If you owe on your current mortgage close to the appraised value of your property, but not more than 105% of the current market value of the property, then yes, you owe about what your property is worth. The current value of your property will be determined after you apply to refinance, but as an example, if you think your property is worth $200,000 but you owe $210,000 or less on your first mortgage you may qualify.
4. Fannie Mae or Freddie Mac own your loan? If your loan is owned by or has been securitized by Fannie Mae or Freddie Mac, you should qualify. To find out if either organization backs your loan, call 1-800-7FANNIE or 1-800-FREDDIE or enter your address online at the lookup tool here at Fannie Mae or here at Freddie Mac. Please double check the ownership with your lender or loan servicer. If you do not have a Fannie Mae or Freddie Mac loan, you will not qualify. Note, if your monthly statements come from say, CitiMortgage or Wells Fargo, your loan still could be backed by Fannie or Freddie, so be sure to check.

If You Answered Yes to All
If you were able to answer “Yes” to all of the above questions, you may qualify to have your loan refinanced under the Making Home Affordable — Refinance program and are ready for the next step, which is to call your lender or mortgage servicer at the number listed on your monthly statement. You can also apply through any Fannie Mae approved lender if your loan is backed by Fannie Mae.

If You Answered No to Some
If you could not answer “Yes” to all of the questions, don’t despair. You might qualify for the “loan modification” section of the Making Home Affordable program. To see if you qualify for that option, read my piece, “6 Steps to Determine If You Qualify to Modify Your Mortgage Loan to Lower Monthly Payments.”

Note: You have until June 6, 2010 to apply for and close on this refinance option.

Tip: To learn more about keeping your home, read my book, “Your First Home: The Smart Way To Get It and Keep It.” It has plenty of tips to suit even homeowners who are in their second or third home. See the table of contents and an excerpt in this downloadable PDF.

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