It's been almost a year since President Obama announced his plan to assist the American housing market. So what does this mean for you?
Each and every one of us has been hard hit by the current economic crisis. We all know someone who's lost their job. Or maybe you've lost your job yourself. And all of a sudden we can't make payments on credit cards, car loans or home mortgage payments. And with that, the bad-credit albatros soon starts to weigh us down. With unemployment, high interest rates and the ever escalating cost of homes maybe you now owe more than the home is worth, or maybe you simply can't make the monthly mortgage payment.
Step in President Obama and his Home Refinancing Stimulus Package!
Part 1. Home Affordable Refinance program.
Aimed at helping some 9 million American home-owners, this program requires that you are not defaulting on your mortgage among numerous other requirements. If you qualify, this program will lower your mortgage interest rates, which in turn will lower your monthly payment. So, although the principle remains the same, you pay less interest per month which is a good thing because the equity you have in your home will continue to increase. The last boarding call for this plan June 10, 2010. If you meet the requirements.
To qualify:
- It must be your home and you must occupy it
- You must not be in arrears on your mortgage payments (in fact no payment within the past 12 months should be more than 30 days late)
- You current home mortgage should be somewhere between 85% and 105% of your home's current value
- Your home must not have been on the market during the past two months
- The home loan goes through Freddie Mac or Fannie Mae
To qualify Obama's Home Loan Modification Program, your primary residence housing expenses must be greater than 38% of your total pre-tax income. The government and your loan lender will work together to reduce your home loan expenses down to 31%. Every month you make a mortgage payment on time, the government will make a payment applied directly to your principle, up to $1,500. The subsidy for the program may run up to $10,500 per home. You have until December 31, 2010 to apply for this program.
Sounds good right. You want to avoid bad credit and keep pushing the equity into your home ... but there are some requirements to meet for this home loan mod:
- The home must be your primary residence
- The loan must be controlled by Freddie Mac or Fannie Mae
- Your current home loan must be less than $729,750 and been drafted before January 1, 2009
- You can only apply if you're having financial hardships such as a loss of employment or your wages have been cut
- Your mortgage payment must be more than 38% of your gross income.
Of course, things change so make sure you check with your bank or financial advisor.
What we really have to wonder is whether with all these restrictions and stipulations whether these plans are just lip-service or viable working programs which will dig America out of the whole it's currently in?