Is Your California House Worth Less Than What You Owe? A Refinancing Guide For Homeowners With Negative Equity

If you're like 8 out of 10 homeowners in California that owe more than their house is worth, but could benefit from refinancing your home mortgage to a lower rate, then continue reading. The first step would be to determine who actually owns your home loan. Chances are pretty good the mortgage servicer, the bank that sends you the payment statement, and the "actual owner" of the mortgage are two different parties.

Is your home loan owned by Fannie Mae?
If so, Fannie Mae now offers the Desktop Underwriter (DU) Refi Plus Program. This home mortgage refinancing program will prevent unnecessary foreclosures by lowering monthly mortgage payments for millions of eligible homeowners.

What This Means For You...
Through refinancing, borrowers like you can take advantage of today's low rates and reduce their monthly payment. This will help monthly cash flow for millions of families across the nation. Another goal of the DU Refi Plus Program is to help homeowners who live paycheck-to-paycheck, stabilize their finances. This means Fannie Mae and other lenders will now turn riskier loans, such as Adjustable Rate Mortgages (ARM), into more stable loans, such as Fixed Rate Mortgages (FRM).

Easier to Qualify Than Before...
The purpose of the DU Refi Plus Program is to help the economic burden that many of us face today. One way to help with this is to offer assistance to homeowners who were previously ineligible. Under the new DU Refi Plus Program, Fannie Mae reduces eligibility restrictions and requires less documentation.

• Previously, Fannie Mae required applicants to show two current pay stubs as income verification. Under the DU Refi Plus Program, applicants can show only one current pay stub.
• On certain loans, Fannie Mae will now waive appraisals.
• Previously, Fannie Mae would not handle loans over 80% of your home's market value. Now, applicants may have a loan-to-value (LTV) ratio between 80-105% and NO MORTGAGE INSURANCE is required on the new loan.
• Fannie Mae will now accept applicants with a credit score less than 580, if their LTV is 80% or less.

DU Refi Plus Terms and Conditions

Though Fannie Mae will now help more homeowners than ever before with DU Refi Plus, there are still certain restrictions that will apply:

• Loans must be owned by Fannie Mae.
• Any existing subordinations have to be re-subordinated.
• Limited cash-out refinancing (less than 2% of loan, or $2,000).

Ineligible new loan products for the DU Refi Plus program are:

• An ARM with fixed terms less than 5 years.
• An interest only mortgage.
• A balloon mortgage.

You may also be ineligible to participate in the DU Refi Plus program if you made a payment more than 30-days late within the past year.

If you have any questions about how to reduce your monthly mortgage payment, contact John Payne today at 510-799-1400 or 800-259-3424 or John@JPMortgageLoans.com.