Have you been affected by the recent economic downturn and tried to get a home mortgage refinance only to find you did not qualify? You might feel the need to reduce your monthly payments because you have been laid off from your job or maybe you you've tried to sell your house but could not. If so, you are just one of the many citizens President Obama targeted when developing the plan called "Making Home Affordable".
About "Making Home Affordable"
The basics of the "Making Home Affordable" plan rest on allowing mortgage lenders to loosen restrictions on the options for a home mortgage refinance. Lenders are also required to modify the terms of an existing loan in certain situations. Anyone who has been adversely affected financially due to the economy may be eligible to benefit from this plan.
President Obama had a very specific goal in mind when he created this legislation. He wished to stimulate the real estate market by making more buyers eligible for a loan and preventing homeowners from losing their property to foreclosure.
As you may have seen in recent news reports, Making Home Affordable was a major part of the $75 billion bailout plan Congress approved. Mortgage lenders received the bulk of cash incentives in order to cover modifications to current loans and also to approve new mortgages. For homeowners or buyers, this has opened up many opportunities and increased competition from lenders for their business.
Is the Making Home Affordable Plan Appropriate For You?
Were you considering a home mortgage refinance and realized that it did not make sense financially or impossible because of excessive restrictions from the mortgagor? With this new legislation, all that may have changed for the better.
With the Making Home Affordable plan, lenders must work with homeowners to reduce their monthly payments to 31% or less of their income currently being earned. Between the failing real estate market and the recessionary state of the economy, it is not unusual to find homeowners who are paying up to 50% of everything they make monthly on a mortgage payment alone.
Lending institutions must adhere to the guidelines of this stimulus package by offering a 2% rate on existing loans, thereby reducing the percentage of income being paid out on a mortgage. Their costs are covered by the government's cash incentives.
If you are seeking a home mortgage refinance under these terms, you must be aware of the qualifications. These include being current on your mortgage payments now and for the previous 12 months. If any of your payments fell more than 30 days behind, then you are not eligible. You may also need to sign a Financial Hardship letter which states the reason for your loss of monthly income. Any homeowner who has seen their property devalue by more than 15% could receive the 2% interest rate, as well as anyone who financed their home through Fannie Mae or Freddie Mac.
Now that the Making Home Affordable package has been enacted, the possibility of a home mortgage refinance that saves you thousands of dollars annually may just be within your reach. Consider your options and get started saving money today.
