Which Government Refinance Program?

Do you need help with your home mortgage loan but don’t know which Government Refinance Program is right for you? Asking the government for help feels a lot like going to a rich relative with your hat in your hands; however, it doesn’t have to be that way.

You’re a taxpayer and these programs exist to help YOU so don’t hesitate to take advantage of any program Uncle Sam is willing to offer. The problem is making sense of all the different Government Refinance Program acronyms and qualifying rules.

Figuring out your taxes is bad enough these days…peeling back the layers of bureaucracy surrounding a Government Refinance Program is enough to make you crazy.

Government Refinance Program Red Tape

The main problem with any Government Refinance Program is that they’re not user-friendly. Sorting through qualifying rules for HARP, HAMP, and FHA, VA or USDA Streamline Refinance is like reading income tax code. To make it easier for you to decide which Government Refinance Program is right for you I’ve broken the rules down into three easy to digest segments based on the type of mortgage refinancing you need. I’ve also included resources for getting help once you know which Government Refinance Program is right for you.

Start Here For Government Mortgage Help

Most Government Refinance Program help is geared towards homeowners who are underwater in their existing mortgage and cannot qualify for today’s low refinance rates from the best mortgage lenders based on unfavorable loan-to-value ratios. What does this mean to you? If you owe more than your home is worth then you’re underwater. Anyone with a loan-to-value ratio greater than 80 percent, meaning you have less than 20 percent equity in your home can relate to the difficulty this causes when trying to get a mortgage refinance application approved.

HARP 2.0 If You’re Underwater & Can Afford The Payments

If your loan-to-value ratio is greater than 80 percent AND you can afford your monthly payment HARP 2.0 is the Government Refinance Program for you. HARP 2.0 is the newly revised Home Affordable Refinance Program and was recently overhauled by President Obama. Under the new rules you don’t have to document income to qualify, verify employment, or worry about your loan-to-value numbers. There is a catch to HARP 2.0 and you need to be current on your payments. Also, Fannie Mae or Freddie Mac must have your mortgage loan. You can find out more about qualifying for HARP 2.0 by calling a HUD mortgage specialist at 888-995-HOPE (4673).

HAMP If You Cannot Afford Your Payments

HAMP is not a Government Refinance Program but is a loan modification program. HAMP is the acronym for the Home Affordable Modification Program. If you qualify for HAMP your lender will cut your mortgage payment to 31 percent of your gross monthly income. This would allow you to take advantage of today’s low refinance mortgage rates without taking out a new home loan. The list of qualifying rules for HAMP is a bit longer than HARP 2.0; however, here’s the lowdown:

The mortgage loan in question must be on your primary residence and you must have purchased your home by December 31st, 2008. Your mortgage balance must be less than $729,750 and you’ll have to document income and your bills to qualify. Finally, you cannot have been convicted of a felony related to fraud within the last decade. You can find out more about qualifying for HAMP by contacting the HUD help line at 888-995-HOPE (4673).

FHA & VA Streamline Government Refinance Programs

Lastly, if you have a FHA, VA or USDA home loan you may qualify for streamline refinancing. Many of these programs allow you to qualify for mortgage refinancing without getting an appraisal, verifying employment or documenting income. The main benefit of a streamline refinance is a simpler process to refinancing and reduced fees. You’ll have a choice of 30-year fixed, 15-year fixed refinance rates or Adjustable Rate Mortgage loans.

As with any Government Refinance program there are requirements to meet for a streamline refinance and you need to be current on your payments. FHA streamline refinance applications are handled by lenders so enlisting the help of a good mortgage broker can get you qualified while avoiding unnecessary fees. If you’re a member of a community-based credit union that’s also a good starting point for your mortgage shopping.

If you have a VA or USDA mortgage loan you’ll want to contact those agencies directly to find out more. You can learn more about the VA’s Interest Rate Reduction Refinancing Loan by contacting the Veterans Administration at 1-800-827-1000. If you have a USDA mortgage loan you can reach a Rural Development Staff Member at 1-800-670-6553.

Watch Out for Unnecessary Mortgage Fees

Just because you get into a Government Refinance Program doesn’t mean you don’t have to be on the lookout for lender junk fees or markup. The closing costs you pay including the origination fee or unnecessary discount points reduce the benefit you’re getting from mortgage refinancing. You recoup these out-of-pocket expenses by lowering your payment amount; the more you pay at closing the longer it takes to break even.

Do you have an experience with a Government Refinance Program that you’d like to share? Please leave a comment below…