State housing commission announces help for homeowners

As much as $13,000 is available through a Missouri Housing Development Commission refinancing program to help Missouri homeowners avoid foreclosure.

The program is designed for responsible homeowners who need help with closing costs associated with refinancing their existing mortgages and for those who need a reduction in the principal balance of their first mortgages in order to refinance an existing home loan, according to an MHDC news release.

Qualifying borrowers are eligible for second mortgages of up to 3 percent of the primary loan amount, to be used for closing costs and related expenses.

Because the second mortgage through the program is forgiven after five years of owner occupancy, it does not require monthly payments.

Homeowners who are still unable to refinance their existing loans because of insufficient equity may be eligible for additional grants of up to $10,000 each to help them meet program requirements, but the maximum combined amount of the grant and second mortgage is $13,000, the release said.

To qualify for the loans, borrowers must meet Federal Housing Administration lending guidelines and agree to face-to-face counseling with a U.S. Department of Housing and Urban Development-approved credit counseling agency.

Only owner-occupied, single-family properties are eligible, and refinancing must result in a principal and interest payment that's at least $100 lower than the existing payments, or the interest rate must drop by at least 1 percent, the release said. Even if these requirements aren't met, however, refinancing may still be possible if the primary loan is an adjustable rate or balloon mortgage.

Also, the appraised value of the borrower's home cannot exceed MHDC purchase price limits, and cash-outs of the grants aren't allowed.

To qualify for grant funds, the ratio of the amount owed as a percentage of the home's value must exceed 97.75 percent, which is the maximum allowed by FHA guidelines.