Are you one of the millions of Americans who has been contemplating a home mortgage refinance? Perhaps you have lost your job, or had to take a cut in pay. You might not be able to sell your house in the current real estate market and are now facing foreclosure. These are all the scenarios for which President Obama enacted his "Making Home Affordable" plan.
What is "Making Home Affordable"?
What this package has done for the American homeowner is to loosen the restrictions on home mortgage refinance options. It has also required banks to allow for mortgage modification in certain circumstances. Many of those who own a home and are in the midst of a difficult financial situation are eligible for this program.
The president's goal in enacting this piece of legislation was to ultimately provide a positive effect on the real estate market. He is also hoping that the millions of citizens negatively affected by the recessionary economy will find relief, and be able to avoid foreclosure.
The Making Home Affordable plan is part of the $75 billion bailout package which was approved by Congress. Mortgage companies are being given incentives in order to minimize their risk while modifying current mortgages or approving new ones. This is good news for homeowners, or potential homeowners, who will find they now have many more options for mortgage loan terms and the number of lenders who are willing to work with them.
What the Making Home Affordable Plan Can Do For You
If you were previously considering a home mortgage refinance but found that it didn't make sense financially, or was impossible due to restrictions placed by the lender, then it may be the perfect time to revisit this option.
According to the package, homeowners are eligible to modify the terms of their mortgage so that the monthly payment equals 31% or less of their gross income. Because of economic woes and the failing real estate market, many Americans are now paying up to 50% of their monthly income for their home alone.
Banks and mortgage lenders have received a set of guidelines as part of the Making Home Affordable plan. They can offer a 2% mortgage rate, if that will help reduce the ratio of payment to income. Cash incentives from the government will help pay for this reduction.
For the homeowner who is looking for a home mortgage refinance, they must first qualify to be eligible under this stimulus plan. They must be current on their loan in the last year and must not have made any payments more than 30 days past due. They are required to sign a letter of Financial Hardship stating that their income has been reduced, for whatever reason, in order to qualify for the 2% interest rate. If the property value has fallen by 15% or more, than the fixed 2% rate may also be an option. Anyone who financed their home with Freddie Mac or Fannie Mae is eligible for modification.
Under the terms of the Making Home Affordable package, a home mortgage refinance might now be a very realistic proposition, as well as a sound financial decision. Act now to find out what your options are and if you qualify to save thousands of dollars annually with a lower mortgage payment.
