Where to Get Help When Refinancing Your Mortgage

mortgageRefinancing your mortgage can spell the difference between keeping and losing your home.

Most people experience difficulties paying their mortgage. According to the 2013 American Community Survey, 56% of all the housing units in the U.S. are owned by the people who live in them. However, less than 20% of these homeowners have paid their mortgages in full. In addition, about 9.7 million American households owe more on their home than what it is actually worth (underwater mortgage), according to a report published by leading real estate database company Zillow.

The same report also disclosed that 30% of homes in the lowest price tier (houses with median price of $98,400) are underwater. On the other hand, 18.1% of homes in the middle tier (homes with a median price of $163,400) and 10.7% in the top tier (homes with a median price of $306,700) have negative equity.

What should you do if you find yourself in this situation? There are several options that you may want to consider. You can request your bank or mortgage company to modify your loan?s terms, refinance your home, or rent out your home to help you with your mortgage payments. In worst case scenarios, you can try a short sale (selling your home for less than what you owe on your mortgage) or transfer the home?s title to your lender (deed-in-lieu of foreclosure) just to avoid the expensive foreclosure process.

Since no one wants to lose their home, most people would naturally choose the first three options. If you cannot get better terms, you may want to check out the following mortgage refinance programs offered by the Federal Housing Administration (FHA) and Making Home Affordable Program (MHA).

  • Home Affordability Refinance Program (HARP). Homeowners who are current on their mortgage, have a loan-to-value (LTV) ratio greater than 80%, and whose mortgages are backed by Fannie Mae or Freddie Mac are eligible for the program. To apply, get your income details and mortgage statements ready and go directly to a HARP lender.
  • Home Affordable Modification Program (HAMP). This program is primarily for people who are experiencing financial difficulties since buying their home and would like to modify their mortgage loan to keep up with the payments. To qualify, you should have financed your home on or before January 1, 2009, owe up to $729,750 on your primary residence, and are behind on your payments or are facing foreclosure. You should also be able to demonstrate that you are having financial difficulties and prove that you don?t have any convictions for real estate fraud within the last 10 years. To apply, contact your mortgage servicer.
  • Principal Reduction Alternative Program (PRA). This program works with HAMP to reduce the amount homeowners owe on their homes. Through this program, part of the principal is forgiven provided the borrower remains in good standing. Homeowners who are currently underwater on their mortgage and have a current LTV greater than 115% can apply for the program. For more information, contact your mortgage servicer.