Refinancing Changes and eligibility

In past few months, there have been many proposals and changes made for the real estate market and mortgage lending. The majority of these changes are made in response to the large numbers of homes that have been subjected to foreclosure. The troubles with the economy presented many Americans with financial troubles due to the huge rate of unemployment. The recent changes that have been made to the mortgage financing companies provides help for thousands and thousands of struggling Americans who are dangerously close to losing their homes. In addition, there have also been provisions made to help real estate investors as well. Freddie Mac and Fannie Mae are two of the leading mortgage lenders that are making such changes a reality.

The purpose

The purpose for the changes that have been made in mortgage lending for homeowners is simple. The companies are providing help in the form of interest rate reductions and refinancing to keep these people in their homes. With the help of the government bailouts, many more options are becoming available as time progresses.

Previously, it was believed that these changes would only be limited to individual home owners. Now that everything has been finalized, however, it is quite clear that real estate investors also have the same opportunities. Both Freddie Mac and Fannie Mae executives believe that by allowing the same refinancing opportunities to struggling investors that own rental properties the number of evictions will come down.

Refinancing is beneficial during the recovery of the economy. The financing rates are at any all time low. This translates into reduced monthly payment amounts and a reduction in the total amount of the debt. Refinancing is meant to provide more flexible loan terms that consider not only the economic conditions, but also the best interests of the owners and the lending company.

Eligibility requirements

Obviously the main qualifying requirement is that your mortgage(s) need to be owned by one of the two companies. You need to know what the value of your property is, and you may need to have the home appraised for the current market value. Your property value has to be at least 5% higher than your total mortgage amount that you have left. Basically what this means is that the amount of mortgage debt cannot be more than what your property value is under the current market value conditions.

In addition you need to have a near perfect payment history on your mortgage. You need to have timely payments that have been made within the last year – except of course for when the financial struggles began. So, basically if you had made all your payments on time before you got behind you are eligible for refinancing.

Requirement differences

Unlike many other mortgage lenders, Freddie Mac and Fannie Mae are not using credit scores as a determining factor for refinancing. There is also another major difference. These two mortgage lenders are not requiring that you redo your mortgage insurance.