To Refinance a Mortgage Learn About Obama’s Mortgage Stimulus Plan Versus “Hope For Homeowners”

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Obama has signed off on a new mortgage stimulus plan that should in theory give millions of homeowners the opportunity to refinance their mortgages at a lower rate with options to fix the mortgage at the new lower rate.The ‘HOPE for homeowners program’ is a program introduced by George Bush which looks at mortgage refinance for lenders that are in difficulty and are struggling to make their repayments but have sufficient income to meet the payments on a new loan insured by HUD’s Federal Housing Administration also known as FHA.This program clearly pre-dates Obama but is being revisited in order to better meet the current circumstances surrounding home ownership, this program should not be confused with the ‘Making Home Affordable Program’ that has different rules and criteria to the ‘HOPE for homeowners program’ and until legislation has been passed that aligns the 2 programs you need to be aware of the differences.So what does this program currently offer:

a 30 year fixed rate mortgage
the possibility of refinancing to more affordable payments
voluntary basis for both the lender and the borrower

home must be your only house and primary residence
your mortgage pre-dates 1st January,2008
can’t make existing mortgage payments without help
from March 2008 your total monthly payments have been more than 31% of your gross monthly earnings
You have not been convicted of fraud in the last ten years, deliberately defaulted on debts and haven’t obtained a mortgage by deceptive means.
Must maintain a fully documented record of income and employment.
must be prepared to agree to positive equity sharing both current and future
If you take this option you will not be able to take out a 2nd mortgage under the program for the first 5 years of the loan and you will have to agree to share the value of the positive equity, both current and any future increases for your home on a sliding scale over 5 years, after 5 years the amount of your share in the positive equity is 50% which is the most you can attain. This may sound a lot but versus losing your home it is probably a better option.To be eligible for the ‘make home affordable’ program:

you need to own and occupy a 1 – 4 unit home
you need to be up to date on your mortgage repayments
You must have a mortgage with or securitized by Freddie Mac or Fannie Mae
The mortgage amount can be no more than 105% of the house value
It is immediately apparent that the requirements for the make home affordable program appear to be less stringent than the ‘HOPE for homeowners’ program and you do not have to commit any of the equity of your home this program.

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