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Ask the Experts

New Mortgage Aid Program

Revamped plan helps 'underwater' homeowners get lower-interest financing

En español | Q. Thanks to the terrible real estate market, my home is now worth a lot less than what I owe on it. I'd like to refinance. Isn't there a new government program to help people in my situation?

A. Not a new one, but a revamped one. In October, President Obama announced the overhaul of the Home Affordable Refinance Program, which hadn't helped nearly as many homeowners as the government predicted.

See also: 10 steps to get you ready for retirement.

House sinking in water - federal loan program has changed to help more homeowners qualify

Federal loan program has been modified to help more American homeowners qualify. — Photo by Alamy

Housing officials say the retooled effort could help more than 1 million homeowners like you refinance to today's rates — around 4 percent — and save on average about $200 a month.

Under the new terms of the program:

  • You will no longer be required to get your property appraised when you apply for refinancing. That means you can qualify regardless of how "underwater" you are.
  • A slightly tarnished credit history will no longer disqualify you.
  • You must be current on your mortgage for the last six payments.
  • Your loan must have been sold to Fannie Mae and Freddie Mac before June 2009. You can determine whether you meet that condition by going online to Freddie Mac or Fannie Mae.

You can get more information on the Web on the Fannie Mae loan program and on a Freddie Mac loan.

If your loan doesn't qualify, you may want to contact your servicer or other lenders to discuss other programs that might work for you.

For general information on mortgage financing, go to the Federal Housing Finance Agency.

Also of interest: Do the math for retirement.

Carole Fleck is a senior editor at the AARP Bulletin.

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