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You can refinance without equity if you can find a lender that is willing to take a risk on loaning you the money. A lot of times when you seek to refinance your home loan it is because you have found a lower rate of interest than what you are currently paying. You would be able to get a lower monthly payment or may even be able to reduce the length of time that you pay on the note. In either case, you would be able to save a significant amount of money by obtaining a new loan on your property. The housing crisis resulted in an influx of home owner’s needing to refinance their homes to afford the payments and many of these owners found that they owed more on their home than the current market value of the property. The federal government created a program that is geared to help homeowners keep their homes and offers new terms for the property that they may not be able to get from a private lender.

If you qualify for this federal program you can refinance without equity in your home or even if you owe more than the market value. A private lender has guidelines to follow and one of them is the requirement for equity in the home. The ball park figure is that you should have a minimum of 20% ownership in the home before you will be approved for another loan with different terms. If your home has been devalued by the economic downturn, even though you have made a down payment on the home and you have made all the required payments, you may still not be qualified. The Home Affordable Refinance Program set up by the government may be able to help. The lenders who participate in the program by lending money to a homeowner who would not otherwise qualify will receive a financial incentive for doing so. The government will pay a bonus to the lender who lends to a homeowner who does not have the requisite 20% home ownership.

In this government sponsored program you can refinance without equity even when you owe more than the house is worth. The program will cover up to 125% of the value of your real estate in the new loan. If you have a home that now appraises for $100,000 but you have a loan on the property that has a balance owed of $125,000 you will qualify for the program. Another requirement of the Home Affordable Refinance Program is that the home that you are seeking a new loan on must be the home you reside in. If you are seeking the loan for a vacation home or for investment property you will not qualify. Another stipulation of the program is that your house value cannot exceed $729,750. You must also have the gross monthly income to support a mortgage payment that is 31% of that total. The last criteria that you must meet are the one that requires you to have a loan that is a loan under the Fannie Mae or Freddie Mac lending program.

You will need to contact the lender that currently holds the mortgage on your property. You must be up to date on your payments and you will not qualify if you had payments that were more than 30 days late in the past year. In most cases when you want to renegotiate the terms of your existing mortgage you will contact several lenders and shop around for the option that is more beneficial to you and your financial situation. If you are limited because you can refinance without equity only in the federal program, then you will have to work with your current loan provider.