There are a few more considerations to be added and taken into account that are not like the common conventional loan refinance before you might decide federal refinancing is the appropriate type for your fed loan. A refinancing process by way of the home affordable refinance program gives you as the homeowner a cut on the interest rate, repayment term and gives you the option to replace an interest only or adjustable rate mortgage with a fixed rate loan. As there are some lenders that are experiencing overwhelming volume while processing refinance applications, you should heed these tips to make the process a lot easier.
The first step you should take is to find out if you are eligible for the home affordable refinance program. To qualify in this program, you are required to own a fed loan from Fannie Mae or Freddie Mac. You can look up your loan and determine if it is guaranteed by either one of them by looking at some websites that provides the service. Unlike other programs like home affordable modification program, your monthly mortgage payment must be current. To be eligible for a federal refinance, you cannot be late for more than 30 days within the last year. Your first mortgage must also be less than or equal to 125 % of your home’s current market value. If you own and occupy vacation homes or properties numbering one to four units you are eligible for the home affordable refinance program.
After you get the information needed to be eligible for the program you need to gather your documents. It is very important to get a copy of your credit report and to be sure that all the information on the report is accurate so it may assist you in getting an approval on your refinance. There are several documents that your lender will be asking of you. Such documents are documentation of your monthly gross income, your current tax return, documentation of any second liens, documentation of all of your credit card debt and your monthly payments, and documentation of any other debts you may be responsible for and its monthly payments. You will then be able to get the home affordable refinance application that is required to be submitted plus all of your documentation from the lender that you plan to be refinancing with.
You should contact multiple lenders to compare the interest rates that they would be charging with your fed loan. This is due to the general rule of thumb that when you are considering refinancing a home loan you should do it when the current interest rate is 1% lower than the interest rate currently paid on a mortgage. This however does not apply to the home affordable program’s borrowers because in their case the lender will not refinance a mortgage that has more market value of the house. After your loan is applied, your lender will give you a good faith estimate. This document will include the new terms and rates of the loan. You should carefully compare the old and new loan terms would be somewhat beneficial to you.