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Getting By: The Race to Refi

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For this week's installment of our bi-weekly column "Getting By: How Vermonters Are Surviving the Recession," I wrote about the current mortgage refinancing boom.

Interest rates have dropped dramatically over the past few months, and many Vermont homeowners have been scrambling to refinance and lower their monthly payments. But some borrowers have been unable to take advantage of the lower rates, either because of bad credit, or because they didn't have enough equity in their homes.

On Wednesday, the day the "Getting By" feature was published, the Obama Adminstration announced some new rules that will help some of those homeowners access the new, lower rates. "The guidelines for refinacing have been expanded to help some homeowners get their monthly payments reduced, and to get a more stable product," says Jodi Harrington of Opportunities Credit Union in Burlington.

According to Harrington, the new rules apply to people whose mortgages are backed by the government-sponsored enterprise Fannie Mae. For those borrowers, the Obama plan raises the required loan-to-value ratio to 105% for people looking to refinance. That's good news if you're stuck in a bad loan that now exceeds the value of your home.

The new regs also exempt some homeowners from having to secure costly private mortgage insurance.

So, is your mortgage backed by Fannie Mae? Harrington says it can be hard to tell. Even if you got your mortgage through Opportunities, it might be owned by Fannie Mae. "We still always service them," says Harrington, "so they wouldn't notice anything in their service that would indicate that Fannie Mae owned it." In other words, call your mortgage lender and ask who owns your loan. The new regs take effect on April 1.

Check out this article from the New York Times to see if you qualify — or call your mortgage lender.

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