As mortgage interest rates have continued to decrease in recent years, many homeowners with little or no equity in their homes, but with good credit scores and income levels have not been able to take advantage of lower rates. This is due to the fact, that often times homeowners either could not qualify for a home loan due to the value of their homes or could qualify, but only with the addition of mortgage insurance, making the financing more expensive.
However, recently Fannie Mae has rolled out a program that will for a limited time, allow certain homeowners to refinance their current home loans, even if they have little or no equity and take advantage of historical lows in interest rates.
The program does have a few levels of criteria that homeowners must meet in order to qualify. First, it doesn’t matter who the homeowner currently make their payments to, but the loan must be owned by Fannie Mae. In order to check and see if your home loan is currently owned by Fannie Mae you can quickly go to: http://www.fanniemae.com/loanlookup/ and input your address for immediate results.
Next, your loan must have been originated prior to June 1, 2009. The reasoning behind this is that in the past two plus year’s interest rates and have values have both dropped and so the program is aimed at homeowners who already have Fannie Mae loans, but haven’t been able to refinance to current market interest rates.
Finally, the existing mortgage loan must not have mortgage insurance included with it. Or in other words, when the homeowner obtained the current loan, they took out a Fannie Mae loan that did not have any mortgage insurance monthly payment included with it. You can however have a second mortgage behind this Fannie Mae loan and still qualify for this program.
If you meet those qualifications, then Fannie Mae will allow you to refinance your home loan, even if you up to 105% of your current home value or higher, at current market interest rates; including additional debt allowed for a second mortgage.
Furthermore, when it comes to a valuation for your home currently, Fannie Mae may either allow you to refinance without appraising your home if your stated home value falls within their automated estimation of your home’s value. Or they may require an appraisal of the home, but again with a higher tolerance of loan amount to property value.
While this program is not going to be an option for everyone, for those homeowners who think they may fit the qualification terms for the program, this is a great opportunity to lock in your home loan rate at incredibly low interest rates.
For full qualification, of course it is always advisable to contact a licensed mortgage lender, such as Strategic Mortgage. As always, as guidelines and standards change we will provide additional information and updates.