Traditionally, homeowners in search of a mortgage interest rate that is lower try to refinance. While the refinancing option still resides, it’s generally available only to borrowers with good credit who are current on their loan. In light of the country’s foreclosure catastrophe, emergency government action provides a new way to attain an interest rate decrease. Your financial situation dictates the option you will be able to exercise.
Get in touch with your lender. You’ll find its contact info on your monthly mortgage statement. Your lender will ask you about the specifics of your financial circumstance. Have income employment and expense information handy.
Ask your lender about a mortgage refinance, even if you are current on your mortgage and have great credit. The Federal Reserve Board suggests starting with your initial lender because it may offer competitive prices or refinance-associated fee waivers to maintain your small business. Shop around, however, as other creditors may be willing to cut you a better deal to steal you away. The brighter your financial picture, the better your chance at an acceptance and positive terms.
Inquire about the federal Making Home Affordable program if you are in an unaffordable mortgage, past due on your home loan or facing foreclosure. Though some banks offer in-house assistance, Treasury Department statistics reveal that many major mortgage brokers take part in Making Home Affordable.
Query your lender concerning the Home Affordable Refinance Program (HARP). This program is for borrowers who are current in their mortgage but find the stability of a long-term, fixed-rate loan. The Making Home Affordable site states that HARP is best for homeowners whose property values have diminished, leaving them ineligible for a conventional refinance.
Apply to your Home Affordable Modification Program (HAMP) in case your monthly mortgage payment exceeds 31 percent of your monthly income. During HAMP, your lender’s first move to lower your mortgage payment is to decrease your interest rate to as low as 2 percent. If you meet eligibility requirements and make three straight obligations in a trial modification, your lender will approve you for a permanent modification. You maintain your lower rate of interest for five decades, based on the Making Home Affordable site. After five decades, your rate increases gradually to the industry rate on the day you were accepted for a permanent modification. When it sets, it’s adjusted for the rest of your loan.