Upside Down to Right Side Up!

The big question I receive a lot these days seems to revolve around the fact that many people owe more on their house than it is worth.  They make their payments on time and they do all the right things but they can’t seem to refinance because there is no equity in there home.

The good news is this, if your loan was originally sold to Fannie Mae or Freddie Mac you can refinance.  Refinancing a Fannie Mae loan is slightly easier but their LTV requirement is tighter.  Fraddie Mac allows a greater LTV differential but they are more restrictive on how you go about getting refinanced.

Let’s take a quick look at the differences:

Fannie Mae:  If you have a Fannie loan you can refinance with any company that sells loans to Fannie.  You are limited to 105% LTV but as long as you have been making your payments on time you can refinance without regard to income, assets or current credit score.

Freddie Mac:  If you have a Freddie loan you refinance even if your loan balance is up to 125% of the current value of the home.  That is a huge help in some markets!  However, it is tougher to get the refinance completed because you MUST go through your current lender for the refi.  The big complaint is that these lenders are not providing good customer service and it is very, very hard to get a call back.

So What is Next:

The first thing anybody needing a refinance to lower their mortgage payment should do is determine if their loan is a Fannie or Freddie loan.  The U.S. Government has set up a web site that will direct you to the appropriate sites for you to investigate who holds your loans.  Just go to http://www.makinghomeaffordable.gov/loan_lookup.html

Once you have completed the search and have determined who your loan is held by you are ready for step two.  If your loan is held by Fannie Mae you are in luck!  You can go to any lender that sells loans to Fannie Mae and apply for a loan under the Making Home Affordable program.  Just make sure to inform the loan officer of your situation.  If the L.O. doesn’t understand what program you need then move on!  Find one that does!

If your loan is held by Freddie Mac then you are in for a challenge.  You will need to set aside about 4 hours.  Call your lender’s customer (no)service number.  Start with he (no)service representative that answers the phone and don’t take ‘No’ for an answer.  Climb the ladder from rep. to supervisor to manager until someone tells you how to appy for the Making Home Affordable refinance program.

If you find that your loan was not sold to Fannie or Freddie then you have to go a completely different route.  You will more than likely need to seek a Loan Modification attorney to assist.  …But that’s a different post all together…

….Coming Soon…. Loan Mods – Who to Choose