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  • Are you among the 62% of Americans who are unaware of the Government Mortgage Relief Programs (HAMP and HARP)? Learn how these programs can help you with your mortgage difficulties?

    Those homeowners who are labeled as “underwater”, or as owing more than the value of their home, now account for over one fifth of all mortgage owners. This is not a comfortable position in which to find yourself and most people in this situation feel that there isn´t much they can do about it and they pay the higher mortgage rate or foreclose. However there are other ways of dealing with devalued property such as the government lending programs.

    There are two called HAMP (Home Affordability Modification Program) and HARP (Home Affordable Refinance Program) which are specifically designed to help people to make use of lower interest rates when they are “underwater” and in this way avoid foreclosure. The terms of the mortgage are renegotiated and the interest rates refinanced at a lower rate so that the mortgage payments can be adjusted in line with present mortgage values.

    The credit rating of anyone who takes advantage of the program will appear on the credit report as “current on payments” (at the newly adjusted amount). Credit information can be monitored from the three national credit bureaus which are Equifax, Trans Union and Experian. This is important because good credit rating can mean better rates and terms when dealing with lenders. To access HARP borrowers must have loans held by Fannie Mae and Freddy Mac (which are now under federal conservatorship). Loans have to have been sold before April 1 2009. In the case of a 30 year fixed rate mortgage or a 15 year loan there is now no limit as to the amount owing in relation to the value of the property.

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    There is a ceiling for other mortgages, and the loan-to-value ratio for fixed rate loans of more than 30 years is a maximum of 105%. This applies to adjustable rate mortgages with terms longer than 30 years as well as adjustable rate mortgages with fixed-rates for 5 years or over. Additionally you cannot be considered if your payments have been late during recent months. It is still possible to catch up and qualify though because this program will carry on until December 31 2013. An eligible borrower has to benefit from lower payments or a more “stable” loan like changing to a fixed rate from an adjustable rate mortgage. If your payment rises above 20% then you have to re-qualify by having a credit score of no less than 620 as well as not having a debt-to-income ratio of more than 45%. Lenders must verify your assets and income. Borrowers who have been declared bankrupt or whose credit ratings have been lowered due to a foreclosure do not have a waiting period as was previously the case. Another requirement that has been waived is that of lender representations and warrants for the new loan as well as the loan that is being refinanced. The fees charged by lenders called “loan level price adjustments”-a.k.a. “risk-based fees” are much lower now so that mortgage rates will also be lower. This HARP plan is new and could help many “underwater” mortgage holders. The HARP Eligibility Calculator, (visit the Zillow calculator) could help you to know if you are eligible!

    Why not look into these programs in more detail and. At the very least you will lower the percentage of Americans that are unaware of them.

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