When President Barack Obama announced his “Home Affordability Plan” he was fully aware of the hardships facing millions of homeowners in todays economy. Many borrowers fell victim to high interest ARM loans, locked into a high interest fixed rate loan, or have a home which is worth a lot less than it was when they purchased it due to the housing crisis. The need for a mortgage stimulus plan was high and President Obama delivered.

Obama introduced the Housing and Homeowner stimulus plan early in march that instantly made millions of homeowners, some who were previously unable, the chance to refinance into a fixed rate 4.5% mortgage. This mortgage stimulus plan makes an estimated 9 million homeowners eligible for a loan refinance or modification right now, at record low rates. Millions of homeowners will be able to fight off possible foreclosure or mortgage default and refinance to save their home as well as hundreds of dollars per month.

Using this stimulus plan, homeowners will see help in 2 different ways. First, if you currently are stuck in a sub prime adjustable rate mortgage (ARM) and have some late payments or otherwise are in danger of losing your home to foreclosure, there is help. This stimulus plan would give cash incentives to mortgage lenders and banks to refinance or modify a homeowners ARM in order to reduce high interest rates and keep the home from begin foreclosed on. This makes qualifying for a mortgage refinance easier as the lenders and banks are more inclined to take on riskier borrowers for a home loan refinance, even if they had been rejected for a modification or refinance before.

Second, the Obama stimulus plan will help homeowners who have remained current and up to date on their mortgage payments but have seen their home value drop and now face a mortgage that is worth more than the house. This mortgage stimulus package will allow these homeowners the chance to refinance up to 105% of the current value of their home. However, the catch is that the loan must be insured or owned by one of the 2 lending giants Fannie Mae or Freddie Mac and again you must be current on your mortgage payments.

This mortgage stimulus plan from President Obama is sure to help millions of homeowners save hundreds of dollars every month and most importantly their homes. The overall effect this will have on the economy is still unknown but keeping homeowners in their houses is generally a good idea. The rush to refinance is on as homeowners rush to refinance their home mortgage and take advantage of these amazing offers from the government.

-M Petrone

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