The Making Home Affordable refinance program received a small boost last week when the cap on Loan to Value was raised from 105% to 125%. In plain terms this means that if you owe up to 125% of what your home’s current value is, then you are eligible for the Making Home Affordable Refinance program.
This shift in LTV guidelines opens the doors for many additional homeowners who are currently “underwater” in their mortgage scenarios – meaning that they owe their mortgage servicers more than what the home is currently valued in the marketplace.
The underwater provision only applies to the Making Home Affordable Refinance and not the Making Home Affordable Modification program. Remember that with the Modification program, lenders/servicers will work with you to get your payments down to 31% of your gross monthly income – but eligibility doesn’t mean that you will necessarily qualify for the program – either short or long term. You still must show the ability to repay the loan under the new terms
Much help is needed with the implementation and execution of this program – while many workouts and other refinance options have been put on the table for consumers, the number of homeowners that have actually been helped and closed on new transactions is very small.
Good news on the interest rate front though… Treasury held a very successful 10 Year Treasury Note Auction today which translated into improved bond prices, lower yields and downward pressure on interest rates. Now that we’ve dropped below 5% again on 30 year fixed money, I hope that we see renewed interest and confidence in both the purchase and refinance markets here in the Triangle.
For all your consumers who missed sub-5% rates the last time around, here’s an opportunity to lower your monthly payments and potentially save thousands of dollars in interest over the life of your loan.
Jeremy M. Salemson
Corporate Investors Mortgage Group, Inc.