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How To Refinance When You Have Lost Home Equity

Now that the dust has started to settle in regards to the housing meltdown, or credit crisis as we know it, there has been a change in the mortgage landscape in the last few months.  Right now it is like no other time in history , mortgage values are falling every day, many people are facing foreclosure, and even many mortgage lenders have gone out of business because they don’t have enough money to cover the loans that they wrote.

Did you ever think that you would live to see the time that banks have run out of money? Well that’s exactly where we are right now. There has been over 150 banks in the last year alone that have gone out of business.

refinancing your home today

So what does all this mean to you ? Now maybe you are currently in an adjustable rate mortgage that doesn’t adjust for another year or two, or maybe you are in a 30 year fixed mortgage that doesn’t adjust at all. So why would any of this concern you ?

Well the biggest reason why this may interest you is that mortgage rates are at their lowest levels in recent history. The rates at the time of this writing are going for around 4.75 -4.90 %, that means that you could refinance and get a 30 yr rate for under 5%.

However  the window of opportunity is quite small. Right now inflation is continuing to be a huge topic with the federal government, the American dollar is growing weaker every day, and as we move through out 2009 and approach 2010, it is highly possible that more and more money will be moved out of mortgage back bonds and put into the stock market, which can result in mortgage rates skyrocketing.

So the time to refinance your mortgage is now. But you may be asking your self, ” how can I refinance my mortgage when I have lost equity in my home ?  Although in normal circumstances if a house has little to no equity it can be very difficult to find a lender that would be willing to accept to refinance your mortgage.

However times have changed.

Out with the old administration and in with the new. To deal with the housing crisis, the Obama administration has decided to take action by implementing certain plans to help home owners from forclosure and also to help them reduce the financial strain for those locked in at high interest rates.

The ( HASP) Homeowner Affordability and Stability Plan is designed to help those who have Fannie Mae or Freddie Mac backed mortgages. The main idea behind the plan is to offer incentives to lenders that are willing to help homeowners refinance or at least modify their mortgages even if they have low equity in their homes.

Many people that have taken advantage of the plan have been able to save their homes from foreclosure by getting new lower interest rates that are more affordable.

Some have been able to reduce thier interest rates by more than 2 percentage points, say from having a fixed rate of 6.5 reduced to 4.5 or even more. Many homeowners have seen savings anywhere from $ 200.00 a month up to $ 500.00. this obviously translates into thousands of dollars in a given year.

So if you feel that you are left out of the loop because of your particular situation , and would be interested in taking advantage of these current low interest rates before it’s too late, there is hope. The advisable thing to do, is  to contact your existing lender and talk to them about the (HASP) and find out if you qualify. Your lender will be more than happy to assist you because they are not interested in dealing with the responsibility of having to resell your home because you lost it to a foreclosure.