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Expanded help for homeowners

E-mail|Link Posted by Jill Boynton July 2, 2009 10:00 AM

The Obama administration has expanded the Making Home Affordable program, their mortgage refinancing program, by increasing the loan-to-value limit. Now homeowners whose mortgages are up to 125% of the value of the home are eligible to refinance, an increase from the previous limit of 105%. That should be good news to some homeowners who previously did not qualify for the program.

How much good the relaxed limit will do is questionable. With mortgage rates on the rise the value of refinancing is a little less appealing than it was a few months ago. The average 30 year mortgage rate is now 5.38 percent, up from 4.78 in early May. In addition the new plan may not benefit some homeowners for a few months: borrowers with FHLB (Freddie Mac) loans who refinance through their current loan provider can refinance now, but must wait until October 1st if they are refinancing through a different lender. Those with FNMA (Fannie Mae) mortgages are required to use their current lender and must wait until September 1st. Finally the number of refinancings actually completed through the program has been less than anticipated due in part to a log jam of paperwork; mortgage lenders are hiring to help speed up the process. All this waiting isn't going to help the homeowner who is struggling to make payments or has just lost his job.

For more details about the program click here.

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Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

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About the contributors

Jill Boynton is co-founder of Cornerstone Financial Planning in Newington, N.H. Along with traditional financial planning services, Boynton provides analysis specifically for divorce.

Andrew Chan is the founder of Integrative Financial Advisors in Framingham. He provides comprehensive financial planning advice and investment management services. He has been an adviser for over 12 years and works with clients to integrate all aspects of their finances including investments, retirement, education funding, and tax planning.

Cheryl Costa is a managing director at AFW Wealth Advisors, which has offices in Natick and Purchase, N.Y. She advises clients on investing, education funding, and estate planning. She holds a master�s in business administration from Boston University.

Jamie Downey has been an accountant for more than 14 years. He's a partner at Downey & Co. in Braintree. Prior to joining the firm, he served as a manager in the audit department of accounting firm KPMG.