Affordable Homes

The contraction in the housing market has been disastrous for millions of Americans who’ve bought their homes at the height of the market. As house prices fell, many were left in negative equity. That meant that they could not refinance to get a better rate on their mortgage. No lenders were willing to lend more than what the property was worth. As a result, as many as six million people were faced with the very real possibility of foreclosure.

Fortunately, the federal government has come to the rescue. Through the Making Home Affordable scheme, homeowners who are making a good-faith effort to keep up with their mortgage payments may qualify for refinancing even if their home is worth less than what they owe. Under the new guidelines, if your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac, you can refinance your home even if you are in negative equity. If you qualify, you can borrow up to 125% of the value of your home. To be considered for the scheme, you must be current on your mortgage and no more than 30 days late on payments in the last 12 months.

Refinancing isn’t an option for everyone. If you have a damaged credit history, you may not qualify for a favorable rate on a new mortgage. In such cases, the Making Home Affordable scheme offers the option of loan modification. You can lower your monthly payments without having to bear the cost of refinancing.

Many lenders are participating in the Making Home Affordable scheme. For example, Bank of America offers refinancing under the scheme, as well as loan modification and general mortgage counseling. If you’re struggling to keep current on your mortgage, talk to your lender before it’s too late. You can prevent foreclosure and keep your home.