WASHINGTON, DC (WUSA) -- Families have been stuck between a rock and a hard place; their mortgage is too expensive, and even though interest rates are around record lows, they can't refinance their mortgages because the loan is now bigger than the home is worth. And up until now, homeowners haven't had a lot of options for refinancing at a new, lower rate. That just changed.
The latest version of the Home Affordable Refinance Program(HARP) from the government was just released Friday afternoon and banks started the loan modification program yesterday. The old program limited on how far underwater you could be to get help. In the past, you could owe no more than 125 percent of a home's value. Now there is no limit. That's a potentially huge rule change. Federal officials have also eliminated certain fees.
These types of loans are eligible:
If you finalized your closing by June, 2009.
You must be on time with your payments.
Your loan must be a Fannie Mae, or Freddie Mac loan.
Let's say you have a $150,000 mortgage at 5.5 percent on a home only worth $120,000. Under this program, you could theoretically get a 30-year fixed-rate mortgage at around 4.4 percent. It would take your monthly payment down about 20 percent, from around $1,000 a month to $800.