The housing market has taken a dramatic drop recently, leaving many people facing foreclosure. President Obama along with his administration has announced details regarding their new Home Affordability Stimulus Plan. It is in place to help 1 out of every 9 Americans facing foreclosure. The plan should make it possible for them to stay in their homes and getting refinanced easier even if the home they are paying on the mortgage is greater than the homes actual worth.

This plan was introduced just 2 weeks after Obama announced $75 billion of the $787 billion stimulus plan will be used toward mortgage and housing problems.

This Housing Affordability plan had to be laid out carefully by the government so it would not seem as if they were rewarding irresponsibility or greed. Due to this the first step is to help those owners that have remained current with their mortgage payments for at least 12 consecutive months. However, there are other refinancing options that are offered regardless of your payment history.

The stimulus plan is estimated help as many as 9 million homeowners in America and has to main components.

First of all banks, mortgage lenders and any other financial services are being offered government incentives to relax their requirements for refinancing or modification they would have otherwise. Many people that are struggling to stay in their homes can’t normally get refinanced or a mortgage modification because of the strict requirements but with the government incentives the lenders are more willing to work with these people. These people that are struggling and looking for a home mortgage modification or refinance will be required to sign a financial hardship affidavit that will explain in detail the nature of their current financial difficulties. Once this is done a owner can see their interest rate drop to as low as 2%, extending mortgage time frame or other options that will be able to reduce their payments to 31% of your total monthly income. The stimulus plan will also be limited to owners whose total loan is no more than $729,000 for a single family house.

The incentives that the banks, lenders and other loan providers will also include up to $3500 when they participate with the new government plan. The banks and loan providers in some cases will also be matched dollar for dollar for the cost of refinancing or mortgage modification. In some cases the homeowners will receive up to $5,000 in federal money in order to help decrease or help pay off any other outstanding expenses to make absolute sure that they stay in their homes. Important notes given by Obamas administration is that homes that were purchased as second homes or as investments are not eligible to participate in the program.

Secondly the plan will call for both Freddie Mac and Fannie Mae, government backed lenders, to allow millions of homeowners to get a mortgage refinancing or modification. They will need to approve the millions of homeowners who are currently paying more towards their home than it is actually worth. People who owe more on their homes than it is actually worth will qualify for the program even if they are not struggling to make their mortgage payments. One condition for the homeowner is that they can not owe more than 105% of their homes total value and the loans must be backed by either Fannie Mae or Freddie Mac. There are also no limits for the size of the new restructured loan.

The “Home Affordability Plan” created by President Obama and his administration is hoped to help save the millions of Americans facing foreclosure and also save millions of dollars. Contact a bank or lender to check how or if you will qualify to benefit from the new stimulus housing plan.

-M Petrone

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