Making some extra savings, repairing the home or car, buying new brakes or some other such important things might be on your cards. But, tight financing must be playing the spoilsport. So, what can you do in such a situation? One of the greatest options is to lower the debt payments including the mortgage payments. Now, in order to get the mortgage payments lowered, you can either opt for loan modification or home loan refinancing. As for the unsecured debt payments you can save money on that by consolidating the debts. But, most of the homeowners being the owner of the underwater mortgages have been unable to get their mortgages refinanced even through the federal refinancing program.
The Renewed Hopes
The main problem with most of the homeowners in getting their mortgage refinanced is the lowered home value. When the HARP or the Home Affordable Refinance Program was first introduced two years back, it had promised that it was going to help at the least 4 to 5 million of the homeowners. But, sadly enough, only 900,000 of the homeowners have been able to get the advantage of refinancing the home loans through this program. These homeowners are the ones whose loans were being owned by the government-sponsored housing finance companies, Freddie Mac and Fannie Mae.
However, there are some renewed hopes regarding this program as the banks are supposed to use some new criteria in order to allow more borrowers to qualify for the program. The banks will have to raise the ceiling based on which the homeowners may be able to borrow on their home value. The expansion may also relax the rules based on which the banks are actually required to take back the bad loans from government.
By announcing such changes, the Federal Housing Finance Agency that is supposed to look over Fannie Mae and Freddie Mac, have eased the expectations of the people by suggesting that almost 900,000 additional homeowners may be able to help themselves with the mortgages; thereby roughly doubling size of HARP program till date.
Some of the market analysts are of the view that this is going to be a good change but again some others are of the view that this is not enough a change that is going to really help all of the distressed homeowners. Amongst the 22 million homeowners, those who will be eligible for this expanded refinancing program, almost 70 percent of them are making payments on the basis of 5 percent and may be more. On the other hand, now in general, the interest rates of the conventional mortgages are close to almost 4 percent.
Yet some others are of the view that as this refinance program is just optional, the private lenders may also impose some additional restrictions. Moreover, refinancing is really a costly affair and requires quite a lot of stuffs to be devoted to complete the refinancing applications. Thus, most of the lenders might not even be interested in going for the refinances.
Furthermore, some other analysts are of the view that though this refinancing program is supposed to provide help to many more borrowers, it is expected that there is going to be little increase in the consumer demand for the refinancing. But still, the economy is so weak and the unemployment rate is so high that many even may apply for refinancing through this program to save money and also save their home.
According to the government officials the main point of the expansion of this program is to reduce the likelihood of defaulted home loan payments.