Refinance Option for Underwater Mortgage
Homeowners often find themselves wondering what their options are when it comes to their existing loans. Some are not even aware that they exist. Refinancing your loan will allow you to consolidate all of your debts into one manageable payment. You also have the opportunity to refinance simply because you no longer need the house and want to move into another area with better property value. No matter what your motivation is, refinancing may be the solution you are looking for. In this article, we will describe refinancing options for an underwater mortgage that you can use.Why is Mortgage Refinancing Beneficial?
At first, we need to think about why people consider refinancing for an underwater mortgage. When you compare a loan with a fixed rate and a long term commitment, refinancing becomes an attractive option. Reasons to refinance an underwater mortgage:- Refinancing your loan will allow you to consolidate all of your debts into one manageable payment.
- Refinance option can help lower the payments and interest rates and give you a better opportunity for paying off your debt.
- By refinancing, homeowners can keep the home and pay it off faster, which helps them to avoid any problems with selling the property.
- It helps to secure the equity in their home.
When you refinance your mortgage, you are effectively replacing your existing mortgage with a new one. Although your interest rates might change and your fees may change, you will not buy a new home. And because your old mortgage is not taxable, there is no reason to pay additional taxes on your refinanced mortgage payments.
If you own a home, it is almost always better to refinance than to let your underwater mortgage sit there and increase your interest rate for years on end. But find that your payment is becoming unaffordable due to one or a combination of factors. A refinance may be able to help you lower your monthly payments and improve your financial position. Besides, a refinancing might allow you to avoid foreclosure by helping you avoid the late fees associated with a foreclosure.
Home Affordable Refinance Program (HARP)
The primary requirement for borrowers to qualify for the HARP is that they must reside in a home worth less than the balance of their mortgage. To determine this value, the Internal Revenue Service considers the fair market value of the property and other relevant factors such as the location of the property, its current value, and the homeowner's income and expenses.The homeowners who do not meet the eligibility criteria may still qualify for the program, but they will have to pay a higher initially-interest rate. Qualifying homeowners must also show that their income and expenses do not exceed the benchmark for homeowners for a particular income bracket, as determined by the Internal Revenue Service.
FHA Streamline Refinance Program
The FHA Streamlined Refinance Program not only makes it an easy snap for any homeowner to reduce their monthly mortgage payments by refinancing an over-dated FHA loan, but it also reduces the cost of the loan by up to 70%. A common misconception is that refinancing must be done through a conventional lender or the traditional loan process. Nothing could be further from the truth.To qualify for the FHA Streamlined Refinance, a homeowner does not have to do business with a traditional lender at all. They can apply for their new home loan through one of the many approved online lenders. The FHA will even provide an appraisal that eliminates the need for a conventional lender to oversee the process.
The FHA Streamline refinance program allows you to refinance your FHA through one of the approved lenders that participate in the program. This means no fees and no PMI (payment protection insurance). You can have your FHA refinance approved within minutes, sometimes even seconds! Because these lenders are part of the program, the processing is faster, and the credit score savings are higher. The lower interest rate also saves you money each month.
Freddie Mac Enhanced Relief Refinance
Available to all homeowners as of the end of May, it's an excellent loan alternative for underwater homeowners that simply do not have enough equity built up in their house to qualify for a traditional refinanced home loan. But if you're considering a Freddie Mac Refinance, you want to make sure you've done your research and have chosen a program with the best terms and conditions for your situation.When you decide to apply for a refinancing program with Freddie Mac, you need to know how much equity you have in your house. It's also essential to determine how much you'll need to borrow. The maximum amount of money you can borrow depends on your gross monthly income, the current value of your mortgage and the interest rate on your existing loan. In most cases, a refinancing company will provide an appraisal and an amortisation schedule to calculate the maximum amount of money you can borrow.
You should also consider your payment history when choosing a Freddie Mac loan. A good qualifying score will lower your interest rate, and the monthly payments will be easier to afford. But remember, the lowest interest rate doesn't always guarantee the most down monthly payments. If you need extra cash, consider a refinance no matter how intense your prices are now. If you qualify for a Freddie Mac Enhanced Relief Refinance and your credit rating isn't perfect, there are still ways you can reduce your payments or roll them into a new mortgage loan.
CARES Act Relief
Temporary forbearance (or pause) of mortgage payments for up to 360 times without any additional interest or fees- No evictions or foreclosures till mid-May in the earliest
- No need to record your hardship
- No harm to your credit, should you fulfil standards
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