Obama Plan Offers Refinancing Help to Some
Recently, President Obama and his economic team have announced plans designed to help struggling homeowners refinance into more affordable mortgage. But in typical government fashion, they have also confused a lot of people, largely by having so many housing programs with different names, websites, etc.
Are you qualified for refinancing help under the Obama administration’s new programs? What do these plans consist of, and how will they help homeowners who are struggling with their mortgage payments? These are some of the questions I’ll zero in on with this blog post. Specifically, I’m going to focus on the refinancing side of things and explain who might qualify for help.
Do I Qualify for Refinancing Help?
This is the number-one question most homeowners have, so let’s get right to it. The new program is called the Homeowner Affordability and Stability Plan, and it offers two different types of help for struggling homeowners — modification and refinancing. Here’s how the refinance side of the plan is designed to work.
Under this plan, help is being offered to people who are current (not behind) on their mortgage payments. The real benefit comes in the form of equity requirements. Without this program, you would probably be required to have 20% equity in order to refinance your home. But under the new plan, homeowners with less equity can still qualify for refinancing. In fact, if your mortgage exceeds your home value by 5% you could still qualify for refinancing help (the bar seems to be set at the 5% mark). If you’re underwater on your mortgage loan beyond that mark, you are probably out of luck.
To qualify for the new program your home loan must currently be owned by Freddie Mac or Fannie Mae. Your current lender can tell you if yours is a conforming loan help by Freddie or Fannie.
I’d also like to stress that this program is designed to help homeowners who can realistically afford their new payments, after the refinancing process. In fact, the lender will check your current income status to ensure that you can make your payments. If you haven’t had a problem with this in the past, it shouldn’t become one now. After all, your monthly payments should be smaller after you refinance, so they’ll be even more affordable in relation to your income.
Where to Learn More
If you think you could be qualified after reading the information above, you should visit the Obama administration’s newly created website at FinancialStability.gov. Here is the page you need. From there, you can read through the eligibility requirements in more detail.
Filed under: Help for Homeowners