"Making Homes Affordable Program,"

The "Making Homes Affordable Program," is designed to help up to 9 million American families refinance or modify their loans to a payment that is affordable now and into the future.  While the actual underwriting guidelines are still being parsed by everyone, some details are clear...

One of the initiatives in this program is aimed at helping responsible homeowners refinance their loans to take advantage of historically low interest rates. Here are some common questions and answers about the Refinance Initiative contained in the Making Home Affordable Program.

Who is eligible for the Refinance Initiative?  You may be eligible if:

• You own and currently occupy a one- to four-unit home.
• Your mortgage is owned or controlled by Fannie Mae or Freddie Mac.
• You are current on your mortgage payments.
• The amount you owe on your first mortgage is about the same or slightly less than the current value of your house.
• You have a stable income sufficient to support the new mortgage payments.

How do I know if my loan is owned or controlled by Fannie Mae or Freddie Mac?
You can ask Fannie Mae directly.  http://www.fanniemae.com/homepath/homeaffordable.jhtml

I owe more than my property is worth. Do I still qualify to refinance under the Refinance Initiative?
Eligible loans will include those where the first mortgage will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less, you may qualify. The current value of your property will be determined after you apply to refinance.

If I am delinquent on my mortgage, do I still qualify for the Refinance Initiative?
No. But the good news is, you may qualify for the Modification Initiative.

I have both a first and second mortgage. Do I still qualify to refinance under the Refinance Initiative?
As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible for the Refinance Initiative.

Will refinancing lower my payments?
That depends. If your interest rate is much higher than the current market rate, you would likely see an immediate reduction in your payment amount.  If you're paying interest only on your mortgage, you may not see your payment go down, but you'll be able to avoid future mortgage payment increases and may save a great deal over the life of the loan.

What are the terms of the refinance and what will the interest rate be?
All loans refinanced under the Refinance Initiative will have a 30- or 15- year term with a fixed interest rate.  The interest rate will be based on market rates at the time of the refinance. Currently, interest rates are at historical lows, which make this a good time to examine your refinancing options.

Will refinancing reduce the amount that I owe on my loan?
No. Refinancing will not reduce the principal amount you owe. However, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

Can I get cash out to pay other debts?
No.  Only transaction costs, such as the cost of an appraisal or title report may be included in the refinanced amount.

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