According to President Obamas $75 billion housing stimulus plan which was released this past Wednesday, homeowners who are facing foreclosure will be able to refinance their current mortgage into a new one with 2% interest rates and up to a 40 year term. The Obama stimulus plan focuses mainly on “at risk” homeowners such as those who owe as much as 5% more than their home is worth due to bad mortgages or declining property and home values. Also targeted are those who are facing financial hardships such as loss of income, payment shock, increase in expenses, and high mortgage debt to income ratios. This plan also includes some financial incentives for mortgage lenders as well as borrowers, and has two parts. One part would let 4 to 5 million homeowners with good payment standings and whose mortgages are backed by Freddie Mac or Fannie Mae, to refinance their mortgage into a lower, stable, fixed rate mortgage. The other part would let almost 4 million more homeowners more easily modify their existing loans so that their mortgage does not exceed 31% of their income, lowering interest rates to as low as 2%. The eligible mortgages must have originated on or before January 1st 2009 and mortgage lenders are able to offer this stimulus plan package to borrowers until the end of 2012. Keep in mind that borrowers will have to sign a affidavit of financial hardship and fully document their current income. Check my other posts for more information regarding this housing stimulus plan from President Obama.

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