Recently, President Obama has announced a housing plan as part of his overall stimulus package. This plans idea is to allow current homeowners who have kept up their monthly mortgage payments, to refinance easier and take advantage of the near record low rates across the country. Following President Obamas announcement, refinance applications surged over 50% on the day. With over half of those applications asking just for quotes. This means there are a lot of homeowners who can take advantage of this plan. However, there is confusion as to who exactly qualifies for this plan. This plan is aimed at homeowners deemed “responsible” by making on time and full mortgage payments every month yet can not easily refinance due to not having a 20% equity stake in their home.

Obamas refinance plan would cover homeowners who qualify under these guidelines:
-Owe between 80% - 105% of their mortgage.
The stats show that over 25% of mortgage holders in the US fall into this category alone, that is over 14 million home owners. Another 24% of homeowners actually owe more than 105% of the value of their home. This hold especially true in parts of the country where home prices have fallen the most.

-Loans which are backed by Freddie Mac or Fannie Mae
Well over half of all mortgages are ultimately backed by one of these 2 powerhouses. Sometimes a homeowner may not be aware of this due to not knowing where the money for their mortgage actually originated from.

-If you have a conforming loan which is higher than average
That means that if you have a loan higher than the median value of homes in your area. However, a lot of times especially in bigger more expensive cities, the home is worth more on the market than the actual appraisal value or loan appraisal of the home. This means that a lot of homeowners whether they know or not, have a conforming loan higher than the limit.

There will be more details on Obamas plan to help homeowners who have been following the rules refinance. More information will be available on March 4 when the plan is actually rolled out. There is also a second part to his housing plan which will allow homeowners who have fallen behind in payments or facing foreclosure to more easily refinance. Now however it would be best to contact potential lenders in anticipation of the March 4th announcement.

-M Petrone

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