It's Time to Rethink Home Refinance

If a fast food restaurant charged you $6 for a hamburger it sold to most other people for $4, you'd be upset, right? How angry would you be if you had to plunk down $11 to see a movie when everyone else at the ticket window was being admitted for $8? And wouldn't you be furious if your cell phone company billed you 15 cents per minute while charging your neighbor eight cents? Then why are you throwing money away on high interest charges instead of looking into getting a home refinance loan?

New Prez, New Rules

If you haven't taken advantage of the latest rock-bottom interest rates because you don't think you'd qualify, it might be time to give the matter a second thought. President Obama's Making Home Affordable plan has cleared the path to more reasonable loans for an estimated nine million homeowners-many of whom previously wouldn't have qualified for a home refinance loan. If you wouldn't overpay for other things in life, why would you continue overpaying on your mortgage?

Dropping the Catch-22

Prior to the passage of the Making Home Affordable plan, home refinance loans were restricted to an amount not exceeding 80 percent of the home's value. That means homeowners who didn't have at least 20 percent equity in their homes were out of luck. That presented a Catch-22 for a number of people, because the reason they hadn't paid off 20 percent of their home--they'd taken out a loan with too high an interest rate, they'd signed on for an interest-only loan or their ARM had skyrocketed to unaffordable heights--was the very reason they needed to refinance.

Under the guidelines established by the new plan, a family may qualify for a low-rate home refinance loan even if they owe up to 5 percent more than their house is worth. That means millions of people who were on the brink of financial disaster are suddenly going to find themselves with lower monthly payments, extra cash in their pockets and an optimistic view of a bright future. Why shouldn't you be one of those people?

Who Qualifies?

While the less restrictive condition makes the new home refinance loan easier to obtain, there are a few requirements that must be met in order to qualify:

• The existing home loan has to be a conforming loan (controlled by Fannie Mae or Freddie Mac).
• The home must be occupied by the owner.
• Payments on the existing mortgage must be current.
• The owner's income has to be enough to afford the new mortgage payments.

Everybody's Welcome

Of course, one doesn't need to be in financial turmoil to take advantage of the current low interest rates. There are other home refinance packages available to suit a variety of situations. If it's been a few years since you obtained your mortgage, odds are there's a better deal awaiting you. Why continue throwing away money needlessly?