Mortgage Refinance Program Gives Struggling Homeowners Options

When economic times are good, we look at refinance options as a way to pull cash out of our homes or get a better rate than what we signed up for

. Now homeowners who are struggling just to stay in their homes can look at refinancing as a way to get relief from underwater mortgages or mortgage payments that they just cant make anymore.

In addition to HAMP (Home Affordable Modification Program), we have HARP (Home Affordable Refinance Program). This arm of the Obama administrations mortgage stimulus plan gives more than 9 million struggling homeowners the option of refinancing at a 4.5% fixed rate. Here are the rules:

The amount remaining on the mortgage must be for less than $729,500

The home mortgage must have been closed on and finalized before January 1, 2009.

The homeowner must live in the home to be refinanced as a primary residence.

Personal income levels must be verified through the use of tax returns or pay stubs

A letter of "Financial Hardship" written and signed by the mortgage holder is needed. Hardships may include loss of income, job, high medical bills or other unexpected or extreme expenses leading to financial hardship.

The homeowner must agree to get credit counseling if monthly debts, including the mortgage, exceed 55% of the homeowners gross monthly income.

If you are underwater and you have an ARM (adjustable rate mortgage) due to reset at a higher rate or other mortgage that is scheduled to increase, you may want to take a look at refinancing under HARP. With rates at all time lows, why turn to the government program? If your credit has already taken a beating, then you wont qualify for the best rates in the private sector. The stimulus program is designed for homeowners with hardships and you also will incur no refinance costs under HARP.

If you qualify for the program, you can get access to the significantly lower home affordable refinance rates and save a lot of money in the long run. But with a bad credit, it could be difficult to get the lowest home refinance rates. That is precisely the reason why you need to avail expert help and make your task much easier.

The feds will offer incentives to lenders willing to participate. To find out more, check online under HARP or contact a loan servicer familiar with the stimulus program that can guide you through the qualifying steps.

by: Ashlee Pannell

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