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The nation’s housing market is making a comeback. Property values are on the rise and have been for a while.

Despite the market’s continuing recovery, it may not be happening fast enough for some homeowners. According to CNBC, 5.9 million Americans still owe more on their homes than their property is worth. This can be problematic because these homeowners struggle to refinance at a lower interest rate or to lower their monthly payment due to a lack of equity.

Fear not. There are solutions out there for you. A number of existing loan programs contain options for homeowners who may have previously found it difficult to refinance.

HARP

The Home Affordable Refinance Program (HARP) allows eligible homeowners to refinance up to 200% of their home’s value. As an example, you could refinance up to $150,000 worth of mortgage debt even if your home is only worth $75,000.

The program runs until December 31, 2018, but there are certain qualifications you have to meet before refinancing with HARP:

  • The mortgage must be owned by Fannie Mae or Freddie Mac.
  • The mortgage must have been sold to Fannie Mae or Freddie Mac before May 31, 2009.
  • The ratio of the amount owed on your home and its current market value – also known as your loan-to-value ratio, or LTV – must be between 80% and 200%.
  • You need to be current on your mortgage payments. Current means having only one late payment in the past 12 months and none in the past six before refinancing.
  • For most people, HARP is a one-shot deal. The exception to this is if you refinanced a Fannie Mae loan under HARP between March and May 2009. These clients may be able to take advantage of the program again.

Check out our HARP eligibility tool to see if you qualify.

Even if you don’t qualify for HARP, you still might benefit from a similar Streamline program from Fannie or Freddie.

FHA Streamline

If you’re in an FHA loan, refinancing with a Streamline might be another good option to consider. A Streamline offers the opportunity to lower your rate or change your term without the need for as much documentation as a typical refinance. In many areas of the country, no appraisal is required.

Most importantly for you, a Streamline may allow you to refinance even if you currently owe more on your home than it’s worth. And as a bonus, with a Streamline, you qualify for low mortgage insurance rates.

VA Relief

If you’re a qualified active-duty service member, retired veteran or surviving spouse, the VA offers its own version of a Streamline in the form of an Interest Rate Reduction Refinance Loan (IRRRL).

Qualified clients can refinance with a loan-to-value ratio of up to 120%. For example, you could refinance if your home was worth $100,000 and you owed $120,000 on the mortgage.

Loan Modification

If you don’t qualify for any of these programs and you’re seeking relief, talk to your servicer. You may qualify to do a loan modification in order to lower your payment. This can take one of a few forms:

  • Temporary interest rate reduction
  • Principle forgiveness
  • Partial or deferred payments
  • A longer term (which results in lower payments)

A loan modification will show up on your credit report, and as a result, your score can take a hit. However, if you’re responsible, there’s no reason to think that your score can’t reach its previous level after a time.

If you owe more on your home than it’s worth, you definitely have some options available to you. If you’d like to talk to one of our Home Loan Experts about your situation, you can get started online or call (888) 728-4702.

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This Post Has 13 Comments

  1. I refi with harp 1.0 I owe 117000 on my home its worth 75000 to 85000
    I have secound morgage for 25000 is there any help i can get to get loan for fixing up house need big money repairs any help!

    1. Hi David! I’ve passed your question on to our team of mortgage experts who will be reaching out soon to discuss your situation.

  2. I have a loan of $160,000 on a condo currently valued at $74,500. I am not unemployed and my husband and I can afford the payments. The loan will go adjustable in 2 years. We also own a house, and have therefore turned the condo into a rental. We cannot cover the cost of the mortgage with rental income because of it’s location. We can’t write off all of the loss from the condo, because we make too much money. The house we own was supposed to be a “starter home” and is 900 sq.ft. in another bad area, so it is also underwater.

    Basically, we’re losing $4000/year, minimum on the condo, when it is actually rented. Our finances are stretched very thin to pay off all of our bills. Obviously, the economy has no chance of recovering for at least another 5-10 years. Would it be better for me to foreclose on the condo and cut my losses now, or wait it out? If I foreclose, my credit would be horrible, but it would at least give us the ability to save for retirement, kids, and maybe even a better house by the time my credit recovered.

  3. I’m about break even on my mortgage vs home value but I would like to refi my loan to lower rate but most loans require 20% equity and I would not want to pay PMI. Any suggestions? I don’t have an FHA loan and it’s a jumbo (500k). thanks.

    1. James,

      If you don’t want to pay PMI, you are out of luck, because PMI is going to be required on any loan that doesn’t have at least 20% equity.

      I’ll tell you the same thing I told my brother, though…look at the rates now and the rate you have, and do the math to see if paying PMI would be worth it to refinance to today’s rock-bottom rates. He found that it was worth it to him – that he would still save thousands of dollars over the course of the loan, even with PMI.

      You should contact a Home Loan Expert (800 251-9080) to help you work through this, and they can help you make the right decision.

  4. My house is valued at 130,000 and I owe 127,000. I need to refi and remove it from my wifes name since we are divorced. I need help. thanks Dennis

    1. Hi Dennis,
      Please contact one of our Home Loan Experts at 800-251-9080. Or if you can chat by clicking the link on the page.

  5. WHAT ABOUT WHEN YOU HAVE A MORTGAGE BALANCE OF $112K, AND
    A HOME EQUITY LOAN (2ND MORTGAGE) OF $31K. TOTAL= $143K, AND THE HOME IS WORTH $85K-$110K… DOES THE GOVERNMENT HAVE SOME KIND OF PROGRAM THAT WILL COMBINE THE 2 AND LOWER THE VALUE OF THE LOAN? CURRENT 6.25%… I HAVE EXCELLENT CREDIT, BUT I DON’T SEE ANYWAY I CAN AVOID GOING INTO DEFAULT IN THE FUTURE. I RETIRED 2 YEARS AGO. I GET $1285.00 PER MO. WIFE GETS $560.00 PER MO. ANY KIND OF SOLUTION TO THAT? I DON’T WANT TO REFI AND STILL HAVE THE 2ND MORTGAGE. THANK YOU. GARY…

    1. Hi Gary,

      You should contact your servicer about a mortgage modification program. Servicers are given incentives to help you right-size your mortgage. I have heard of many success stories with this, but sometimes it takes persistence in contacting your servicer repeatedly, as it is up to the servicers discretion at this point in the game. If you are truly in danger of going into default, it is definitely in everyone’s best interest that you modify your mortgage, so your servicer should perk up and listen and try to help. Good luck, and remember, if it doesn’t seem to work the first time, keep calling them!

  6. Would I qualify if I had filed bankruptcy. Even with the bankruptcy it is hard to make the payment. I am affaired I will end up loosing my home with no where to go, I am a widow senior citizen, am self employed (real estate broker) you know how the real estate market is right now.
    Please I need some help.

    1. Hi Laverne,

      Please contact a Home Loan Expert so we can discuss your situation. Call us at 800-251-9080.

  7. Thanks, but I called Quicken Loans and apparently there still are no options for people who are underwater but do not currently hold either a Fannie Mae or Freddie Mac mortgage. Thanks for at least acknowledging that there are many of us out there who are underwater, but as of now there is STILL nothing to help us.

    1. Jennifer,

      It’s true to get a refinance for an underwater mortgage there are limitations. In your case, you should call your servicer directly. There are specific incentives in place for servicers to modify the mortgages they are holding. And be persistent. I have heard some people say it took several calls to finally get a modification, so be patient and keep working on it. Good luck!

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