The Missouri Housing Development Commission (MHDC) is now offering a refinance program to help Missouri homeowners make their monthly mortgage payments and avoid foreclosure.
The program is designed for borrowers who need assistance with the closing costs associated with refinancing their existing mortgage, as well as those who need a reduction in their first mortgage principal balance in order refinance their existing home loan.
Qualifying borrowers are eligible for a second mortgage of up to 3% of the primary loan amount to be used to fund closing costs and related expenses. Because the second mortgage is forgiven after five years of occupancy by the owner, it does not require monthly payments.
Homeowners still unable to refinance their existing mortgage because of insufficient equity are eligible for an additional grant of up to $10,000 to help them meet program requirements. To qualify for the grant, the loan-to-value ratio must exceed 99.75%, the maximum allowed by Federal Housing Agency (FHA) guidelines.
The maximum grant amount available for principal reduction is 10% of the primary loan, up to $10,000. To receive the additional grant for principal reduction, the homeowner must also use closing-cost assistance in the form of a second mortgage of up to 3% of the primary loan. The maximum combined amount of the grant and second mortgage is $13,000.
In addition to the FHA lending guidelines, borrowers must receive face-to-face counseling from a U.S. Department of Housing and Urban Development (HUD)-approved credit counseling agency. Only owner-occupied, single-family properties are eligible.
The refinance must result in a new principal and interest payment at least $100 per month lower than the existing payment, or the interest rate must be lowered by 1%.
If these requirements are not met, refinancing is still permissible if the primary loan is an adjustable-rate or balloon mortgage. The appraised value of the home must not exceed the MHDC maximum purchase price limit, and cashout of the grant is not allowed.