The Sonoma County Housing Market hit by foreclosures and short sales, hinders homeowners’ ability to refinance their home mortgages.

Insufficient equity continues to be a growing concern for both homeowners and lenders alike, doing a refinance. Mortgage lenders typically like to see 20% equity for a refinance and in special circumstances they will allow as little as 5% equity. On the other hand, lots of people have insufficient equity and are otherwise underwater on their mortgages. For these people, up until now, refinancing has been out of the question. Lots of folks have only one loan on their property with an average balance under $417,000. Additionally, there are a number of homeowners who are just bearing and grunting paying that higher interest rate every month. Fannie Mae and Freddie Mac have provided a solution to help these homeowners. Enter the Fannie Mae Refi DU Plus Program and the Freddie Mac Open Access Relief Program.

Fannie Mae and Freddie Mac want to help homeowners with insufficient equity, refinance.

The first thing people want to do is visit this website http://www.fanniemae.com/loanlookup/. This website will tell homeowners whether or not Fannie Mae owns their loan. If Fannie Mae does not own their loan, they should check with Freddie Mac’s website https://ww3.freddiemac.com/corporate/. The mortgage being refinanced must be owned by either Fannie Mae or Freddie Mac, as both entities are offering these refinance programs.

The Fannie Mae Refinance Du Plus allows up to 105% financing. It has another perk which involves on a case-by-case basis attaining an appraisal waiver. The parameters of this program are as follows. The homeowner needs to be current on their house payment and have it at least a 700 credit score or better. Their loan amount can not exceed $417,000 and the property must be a primary residence to get an appraisal waver. Note: this program does work on investment properties and second homes.

The program has a net tangible benefit rider that states the homeowner must realize a lower payment through the refinance. Obtaining cash out on this program is not available because it is not considered to be a net tangible benefit to the homeowner. For example if you are a homeowner with a mortgage over 5% it would make sense to refinance today given 30 year rates are in the low 4’s with little or no closing costs.

The second program is called the Freddie Mac Open Access Relief Program. This program mirrors Fannie Mae’s program and appraisal waivers are again on a case-by-case basis and it allows a homeowner to refinance up to 105% of the home’s value with the ability to reduce their monthly mortgage payment. The homeowner must have at least a 700 credit score have no second mortgage and have the first mortgage balance at or below $417,000.

Both programs will only require mortgage insurance if the loan that is currently being refinanced presently has mortgage insurance, otherwise no mortgage insurance will be required even at 105% financing.

With today’s low interest rates, it is a no-brainer to consider every possible Refinance opportunity.

Each of these programs offer the homeowners the ability save thousands of dollars of interest over time. Homeowners, after meeting the criteria should call a loan officer who has both loan programs and who can take the borrowers’ financial information and run what’s called an automated underwriting. Fannie Mae’s underwriting program is called Desktop Underwriter or DU for short. Freddie Mac’s automated underwriting program is called Loan prospector also called LP.

The appraisal waiver if approved, will be in the underwriting findings generated by the loan officer, put it another way, folks will know if upfront they are eligible for the appraisal waiver. These programs are provided by both Fannie & Freddie as way to help folks who otherwise cannot refinance. Fannie & Freddie are fueled by the funding of new home loans so this program helps everyone.

Despite what the media says, loans are available for homeowners looking to refinance and lower their house payment.

Borrowers after making sure their loan is owned by Fannie Mae or Freddie should contact a local lender who can provide them answers upfront. Lots of times the big the banks take days to respond due to staffing and turn times. Scott Sheldon is a local lender who helps folks refinance.