better
M
O
N
E
Y
A
M a n a g ea b le
M o rtg a g e
Low rates and new programs can make your
house payments lower,
by k a r e n c h e n e y
WHEN IT COMES
to m o rtg a g es, h e re ’s so m e th in g
yo u h a v e n ’t h e a rd m u c h la te ly —g o o d n e w s. W ith
g o v e rn m e n t-b a c k e d m o n e y av ailab le, a n d w ith ra te s at
h is to ric low s, th is is a g re a t tim e to re fin a n c e y o u r
m o rtg ag e. So w h a t d o y o u n e ed to do? It d e p e n d s on w h ic h
o f th e fo llo w in g th re e re fin a n c in g sc e n a rio s y o u ’re in.
GOOD CREDIT, 20 PERCENT OR MORE EQUITY IN YOUR HOUSE
“I f y o u r c re d it is g o o d a n d y o u r d e b t lo a d s a re slig h t, you
w ill fly rig h t th ro u g h ,” say s K eith G u m b in g er, vice
p re s id e n t o f m o rtg a g e tra c k e r H S H A sso ciates. “Y ou’re
th e p re m iu m b o rro w e r e v e ry o n e is se ek in g .” S h o u ld yo u
d o it? I t d e p e n d s o n th e d iffe re n c e b e tw e e n th e ra te you
h av e n o w a n d th e o n e yo u c o u ld g et, as w ell as th e le n g th
o f tim e y ou p la n o n sta y in g in y o u r h o u se .
If yo u c a n lo w e r y o u r in te re s t ra te by 0.8 p e rc e n t o r
m o re, y o u s h o u ld e x p lo re re fin a n c in g , say s C a m e ro n
Findlay, c h ie f eco n o m ist for m o rtg ag e le n d e r L en d in g T ree.
A n d th e lo n g e r y o u p la n o n b e in g in y o u r h o u se , th e m o re
se n se it m ak e s to re fin a n ce . T o find o u t w h e n y o u w o u ld
b re a k ev en , u se th e c a lc u la to r a t
mtgprofessor.com.
T o g e t th e b e s t ra te , y o u ’ll n e e d a c re d it sc o re o f 7 20 o r
h ig h er, a n d a to ta l d e b t-to -in c o m e n o g re a te r th a n 41
p e rc e n t. T o find o u t y o u r c re d it sco re, go to
myfico.com
w h e re y o u c a n b u y it fo r a b o u t $16.
CURRENT ON PAYMENTS BUT LESS THAN 20 PERCENT EQUITY
T h e n e w M ak in g H o m e A ffordable refin a n ce p ro g ram
m ay h elp (
makinghomeaffordable.gov
). T h e re are several
p req u alificatio n s: You m u st h av e w h a t’s called a
c o n fo rm in g loan ($417,000 o r less in m o st m ark ets) th a t
is o w n ed o r g u a ra n te e d by F an n ie M ae o r F re d d ie M ac,
an d you m u st have tak en it o u t on o r b e fo re Ja n u a ry 1,
2009. To find o u t if you qualify, call y o u r lender.
W ith F a n n ie M ae, yo u m ay b e ab le to fin an c e all
c lo sin g co sts. F re d d ie M ac allo w s h o m e o w n e rs to fin an c e
u p to $ 2 ,5 0 0 in c lo sin g co sts. You d o n ’t h av e to requalify.
So e v en if yo u lo st a jo b o r y o u r c re d it sc o re h a s d ro p p e d ,
y o u c a n still p a rtic ip a te .
YOU ARE HAVING DIFFICULTIES MAKING PAYMENTS
You m ay b e a c a n d id a te fo r th e M a k in g H o m e A ffo rd ab le
lo an m o d ific a tio n p ro g ra m . W h a te v e r y o u r situ a tio n is,
“e n g a g e y o u r se rv ic e r a n d tell th e m y o u a re stru g g lin g ,”
say s G u m b in g er. All m o rtg a g e s e rv ic e rs —n o t ju s t F a n n ie
M ae a n d F re d d ie M a c —can p a rtic ip a te in th is p ro g ra m .
T h e goal is to m o d ify y o u r lo an so h o u sin g p a y m e n ts
a re n o m o re th a n 31 p e rc e n t o f y o u r m o n th ly g ro ss
in co m e. T h e le n d e r m ay ev en te m p o ra rily forgo a p o rtio n
o f w h a t y o u o w e —re q u irin g y o u to p ay it a t a la te r d ate,
p o ssib ly w h e n th e h o u se is so ld . B o n u s: B o rro w e rs w h o
k e ep u p w ith th e ir n e w p a y m e n ts m a y re c e iv e u p to
$ 1 ,0 0 0 a y e a r in p rin c ip a l re d u c tio n fo r u p to five y ears.
Q
first-time buyer bonanza
The down payment is usually the biggest hurdle for
first-tim e home buyers. Now there's a financial foot in
the door: First-timers who purchase a house before
December i may be eligible fo r an $
8 ,0 0 0
tax credit.
Ask your lender how you can tap this money.
2 5 0 SEPTEMBER 2009 BETTER HOMES AND GARDENS
PHOTO: VEER
