Underwater Mortgage Refinance: New Rules

The President’s revisions to the Home Affordable Refinance Program (HARP) will allow people whose mortgages exceed the value of their homes to refinance their mortgages at a lower rate.  With interest rates at record lows, you might save hundreds of dollars a month.  Knocking two points off a mortgage with a $200,000 balance will save about $350 a month.

There are some catches. The main ones are:

— You have to be current with your mortgage payments (there are other programs for those who are behind in their payments).

— Your mortgage has to be insured by Fannie Mae or Freddie Mac (about half of all mortgages are in this category).

It does not matter how far your mortgage is under water.

It is possible to pursue this refinance on your own, but I strongly recommend that you start with one of the free mortgage counselors licensed by the government.  You can find one at this government web site: Making Home Affordable.

Remember, you should never have to pay for mortgage modification counseling.

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