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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