In the past, the federal Fannie Mae and Freddie Mac mortgage programs would only handle loans of up to 80% of your home’s value, unless you bought mortgage insurance. And if you owed more than your home was worth, you were flat out of luck.
As of this month, that has changed, according to LA Times. Through June 2010, borrowers whose loans are owned or guaranteed by Fannie or Freddie may be able to get quick refinances for up to 105% of a home’s value. They must be current on their mortgage payments, but administration officials estimate that as many as 5 million homeowners qualify. And refis are available for borrowers with credit scores as low as 620.
…[A] homeowner with a $500,000 loan can save $476 a month by cutting a 6.5% interest rate on a 30-year mortgage to 5% — savings that can be plowed back into the economy or can reduce the odds of foreclosure should the downturn deal the borrower a financial blow.
The historically low rates also make this a perfect time to replace a bubble-era adjustable-rate or interest-only loan with a traditional 30-year or 15-year fixed mortgage. [via LA Times]
For more info on the refinancing program click here >