I have already written about Fannie Mae’s HARP program for homeowners who owe more than their house is worth. Now it’s time to check out Freddie Mac’s answer for being underwater.
The LP Open Access
Short version: it’s just like Fannie’s program :-D
Longer Version
Okay, so this program is for people who currently have a home loan that is owned by Freddie Mac. You can check to see if Freddie owns your loan by going to this site. Also, I am happy to do it for you if you prefer.
You also need to be current on your payments. This is paramount.
You need to have owned the home for at least 3 months. Honestly, this one doesn’t make a lot of sense to me. If you bought 3 months ago, your interest rate is unlikely to be so radically high that a refinance makes sense. But whatevs.
All the usual criteria apply, like your debt-to-income ratio, employment history, etc.
Underwater Refinancing – The New Rules
It used to be the case that there was a loan-to-value cap of 125% on HARP loans, which means you can’t refinance if your loan amount exceeds 125% of the value of your home.
Coming soon, there is no cap.
Zip. Zero. Nada.
So what’s the catch? The catch is that just like any other conventional mortgage product, your rate is driven by what are called “loan-level pricing adjustments”. These are “hits” to the cost of the rate, and they are based on your loan-to-value ratio, credit score, etc.
One of the changes to the program being suggested is dropping these pricing adjustments for people who reduce their loan term. That means you might not have any hits to your interest rate if you refinance from a 30 year loan to a 20 year or 15 year loan. There is also some scuttlebutt indicating dropping these adjustments for everyone, but all indications say that’s not officially on the table yet.
It should be noted that as of this writing, these changes have not been implemented yet. It’s coming though.
If you would like to learn more about the Freddie Mac Open Access, HARP loans in general, or any other home loan programs in Oregon or Washington, call me at 503.799.4112 or fill out the following contact form. I promise to not send you spam. For reals.
And as always, feel free to leave a comment below.
