Earlier this week President Barack Obama shared his housing stimulus plan with the country which is aimed to help homeowners who are current in their monthly mortgage payments, be eligible to refinance into a 4.5% fixed rate mortgage loan. Upon Obamas announcement applications for mortgage refinancing spiked as homeowners looked to take advantage of this stimulus package. All totaled the daily applications for refinance quotes surged over 50% on the day over yearly February averages. The economy has homeowners struggling to keep up to sate on their bills and mortgage payments and this stimulus package Obama announced could allow those homeowners to keep their homes and have a little extra money to stimulate the economy with. With waves of refinancing applications coming in there is confusion as to who exactly will qualify for this stimulus plan. Mainly, this refinance stimulus plan announced by Obama is aimed at responsible homeowners who have been making full timely mortgage payments but are unable to refinance due to not having a 20% equity stake in their current home. I have also included the following list of things that will help you qualify for this stumulus package proposed by Obama:

To take full advantage of Barack Obamas housing and refinancing stimulus plan a homeowner must:

-Owe a total amount of 80% - 105% on their current home mortgage.
This means about 26% of current homeowners will qualify for the Obama refinance package. About another 25% of all homeowners would not qualify under this stimulus as it is currently proposed due to owing more than 105% of their current homes market value. This is most true in the places hardest hit by the housing bust such as California or Florida and parts of the Northeast where home values have dropped as much as 40% in some areas.

-Have mortgage loans backed by Freddie Mac or Fannie Mae
Almost 60% of homeowners mortgages are backed by Freddie Mac or Freddie Mae, regardless of who your lender or bank is, odds are your loan is ultimately funded and secured by one of these two giants. If you are not sure whether or not your mortgage is backed by one of these two call your current mortgage lender and ask. Im sure they have been asked this a lot recently.

-Have a conforming home mortgage loan.
A conforming loan is just a loan that conforms to GSE guidelines. This means mortgage loans under $417,000 in most areas and as high as $625,000 in high cost of living areas like Boston, Washington DC, San Francisco, New York, and Los Angeles. However the average home price in say San Francisco is over $720,000 so many people have non-conforming home loans.

Exact details will be available on March 4th when the full refinance stimulus plan is rolled out by Obama. Meanwhile the best thing you can do to prepare to take advantage of this is start researching potential lenders and contact your lender to start the leg work of a mortgage refinance.

-M Petrone

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