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Can I Refinance My Private Mortgage?

Question: I have kept up with my mortgage payments for a year now following a modification.  My payment has been cut by a few hundred dollars and the remaining monthly balance is added to the principal balance. Will I be able to refinance under HARP even though my mortgage is not backed by Fannie Mae or Freddie Mac? If not, is there another way for me to refinance under the new program?

– Manny, N.J.

Answer: No to both questions. In order to qualify for the latest changes to the Home Affordable Refinance Program — beginning on December 1 — borrowers must have a mortgage that’s backed by Fannie Mae or Freddie Mac. This refinancing program is largely intended for borrowers who are underwater, meaning that they owe more on their home than it’s worth.

For underwater borrowers who are trying to refinance a private loan, there is no official program. However, if you are having difficulty making payments under your current mortgage, your best option is to negotiate another modification with your lender. In the meantime, look for other ways to maximize your budget given your current payment plan.

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    • I doubt there is a loan program aruond right now that will lend over 100% of the homes value on a home purchase. You can sometimes get them on refi’s but they are usually loans that are attached to some type of construction or major improvements.Value is determined two ways:In a purchase, the Purchase price or the appraised value- whichever is LESS.In a refinance- the appraised value.If this is new construction, the home is probably worth alot more now than when you purchased it. You should have a lot of equity.Right now, prices are not going up as much as they were, so if this is existing construction, you may have to wait a few months until you have enough equity to pay off the debt.If you have cash in the bank, try to pay off that debt and get a second mortgage instead of putting that additional money as a down payment.You can also wait until you close your loan and refinance with a second mortgage paying off your debt- provided there is enough equity in the house.Sorry to burst your bubble, but let me show you from a lenders perspective.You have $25,000 in Credit Cards and the average interest rate is probably 15% or greater. You are buying a house that the value is $540K, you want them to lend you $565K for a house they know is only worth $540- at an interest rate of about 6%- less than half of what you are paying on the credit cards now.If you were to default on the loan, you get to take all the furniture, clothes, handbags, etc that you paid for using the credit cards, however they can only reposess the home that is worth $540K. If they sell it at auction for the full price of $540 (which is doubtful) they would be at a loss after the Realtor takes the standartd 6% commission (approx $32K). That leaves the bank with getting $508K for the house at best, before fees. This is obviously not a favorable investment for them.

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    • How do you find good refinance rates? I like 123 Refinance. They gave me the option of selecting various rates with different problems. I choose the lowest rate of 3.29% BTW Remember to call and verify the loan rate. Search online to find them.

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