Good news for those struggling homeowners who have continued to make their monthly mortgage payment. HUD director Shaun Donovan announced an expansion of the Home Affordability Finance Program (HARP). This program is aimed at helping homeowners take advantage of lower interest rates – or a fixed interest rate – even though they are “upside down” in their current loan. The expansion allows homeowners to refinance their current loan into a new loan of up to 125% of the home’s current value – up from 105%.

There are some conditions, however:

1) the homeowner must be current on their mortgage payments, and
2) the current mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac

Under the expanded program, a homeowner whose home is currently valued at $200,000. is eligible to refinance their loan up to 125% of the current value or $250,000.

The expansion should help those homeowners who have been hit by declining home values refinance the entire amount owed on their current loans AND it’s good news for lenders too – they don’t have to write off any of the loan amount.

Posted In Blogroll, Real Estate News

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