Homes Affordable Refinance Program: Refinance Or Modification?
The Making Homes affordable refinance program has had its ups and downs. The program was introduced by the Obama Administration in 2009 to help get the economy back on track. The goal was to stabilize the housing market and help 7 to 9 million Americans reduce their monthly mortgage payments to more affordable levels. To do this, the government would work with up to 4 to 5 million homeowners with loans guaranteed by Fannie Mae or Freddie Mac to refinance their monthly payment into something more affordable. The problem has been in the amount of paperwork and people looking to participate in the program getting the run around. The second problem is for those who still owe a large amount on the principal of their home which doesn’t match the home’s value.
Now, the Obama administration is looking at ways to offer piggyback lenders incentives to lower payments on second mortgages. This has been followed by the Treasury Department planning to help find ways to streamline the process designed to get more borrowers to complete the loan modification program. The program can help reduce mortgage rates to as low as 2 percent for five years. Even with this, economists and mortgage experts continue to press the government into forgiving loan balances to restore equity to borrowers who owe more than their home is worth. They say without addressing the real problem, more and more people will walk away from their homes and accept foreclosure rather than make payments on properties overpriced.
The best way to find out if your loan is owned by Fannie Mae is by visiting the Fannie Mae website and searching for “loan lookup”. Once you have determined that your loan is owned by Fannie Mae, the next step is to contact a qualified mortgage professional that has experience with DU Refi Plus mortgages. A typical scenario for this type of mortgage is when someone puts down twenty percent when they bought their home, but because of the economic downturn their home has depreciated a substantial amount.
This program allows the homeowner to refinance without the traditionally required 20% equity in the home. A homeowner can owe up to 125% of the value of the home. Loan modification is for homeowners who are not current in their loan. You can be facing foreclosure and still get a loan modification. Actually, you must be either in default already or in imminent danger of being so very soon to qualify.
A loan modification through Obama’s Home Affordable Plan takes an existing loan and reworks the terms to achieve a lower monthly mortgage payment. Through this program, the late fees and penalties are forgiven, and this allows the homeowner to get a fresh start. Usually any money owed on back taxes or anything else can be worked into the life of the loan.
Learn more about Obama Mortgage Relief Plan Qualifications.
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