Reporting Bill Hudson
BLAINE, Minn. (WCCO) — Standing in the yard of the Blaine home they have owned for the past nine years, Kipper and Samija Wilson have done the math on their current mortgage.
“Six-and-one-eighth right now. The last time we figured it was like $500 a month,” Kipper said.
That’s how much they figure they could save each month if they could refinance their mortgage. Currently, mortgage rates are hovering around 4 percent for a 30-year fixed-rate loan.
But like 18 percent of Twin Cities homeowners with mortgages greater than the current market value of their homes, the Wilson’s were told that refinancing wasn’t possible.
“We looked into it but since our property values dropped we would be stuck with a private mortgage insurance premium (PMI). It would cost us like $20,000 to refinance, not worth it,” he said.
That should change under a revamped Home Affordable Refinance Program (HARP) that the Obama administration is rolling out beginning Dec. 1.
Those wanting to refinance a conventional mortgage owned by Fannie Mae or Freddie Mac, will find it easier to qualify.
The current ceiling of a 125 percent loan-to-value limit is being dropped. In addition, loans with private mortgage insurance will now allow for that insurance to transfer to a new loan. Finally, homeowners with second mortgages or home equity lines of credit will no longer be disqualified from refinancing.
“That’s what HARP II is going to try to address, some of those issues and help homeowners that way,” said mortgage consultant Steve Rice.
Rice is a broker with Marketplace Home Mortgage in Coon Rapids. He said homeowners should begin the process by knowing which kind of loan they have. Only conventional loans underwritten by Fannie Mae or Freddie Mac will qualify under the HARP II.
Still Rice says, even homeowners with VA or FHA mortgages can take advantage of historically low rates.
“They have to meet certain guidelines, live in the home and still be current on their payments. But it’s a great way that I can lower someone’s interest rate and no appraisal is required,” he said.
For information on determining if your mortgage is a conventional loan with Fannie Mae or Freddie Mac use the following websites — https://ww3.freddiemac.com/corporate/ or