Mortgage refinancing to get easier under revised U.S. program

US President Barack Obama on Monday announced new measures to make it easier for underwater homeowners to refinance their mortgages.

A large number of homeowners have thus far been unable to reap the advantage of record low interest rates simply because they didn’t several meet requirements for refinancing. For example, borrowers are usually required to have some equity in their homes to meet the criteria. But, dropping value of property made many homeowners to owe more than the worth of their homes.

Thus, some underwater borrowers had previously no alternative but to refinance with their original lenders.

But, the federal government's new rules will slash the cost of refinancing and remove caps for homeowners with federally guaranteed mortgages, allowing borrowers to refinance their current mortgages to new loans with record-low interest rates and cheaper monthly payments. In other word’s borrowers will be encouraged to secure new loans no matter how much value their homes have lost.

Announcing the new measures, Mr. Obama said, “These changes will encourage other lenders to compete for their business by offering better terms and rates, and eligible homeowners to shop around for the best ones.”

The Obama administration said the new measures could help 1-2 million people pay considerably lower monthly payments. Moreover, the new rules would put around $2,500 more in an average homeowner's pocket per year.

The independent Federal Housing Finance Agency will implement the plan.