Making Home Affordable Refinance And Loan Modification Program – Do I Qualify?

Due to high rates of house foreclosures that are happening in most parts of the country – President Obama has announced a new initiative called the Making Home Affordable Refinance And Loan Modification Program which is basically a homeowner stimulus package.  This plan is designed to help homeowners who are having tough financial problems to keep their homes and avoid foreclosure.

What is the Making Home Affordable Refinance and Loan Modification Plan?

It is a financial plan sponsored by the government to help millions of Americans to refinance their home mortgage in order to avoid foreclosure and losing their homes.  It is primarily to help the following people:

  • Homeowners who are current in their mortgage payments but can’t refinance their mortgage because of lower house value.
  • Workers who have been laid off or reduced hours and are having a hard time making mortgage payments.

I’m current on my mortgage – will I qualify for refinance?

If you are a responsible homeowner that is:

  • Current on your mortgage payments.
  • Mortgage is more than 80% of the house value but less than 105% of the house value.  [edit July 20, 2009 – check out the new LTV criteria for the making home affordable program.]
  • Conforming loan with Freddie Mac or Fannie Mae.
  • Can’t refinance to take advantage of lower rates.
  • Sufficient income to make new lower mortgage payments.

This plan will allow you to refinance your mortgage into a 15 year or 30 year fixed mortgage at a lower interest rate to make the monthly payments more affordable.  The purpose of refinancing the mortgage is to lower the monthly payments.  This can also applies if you have second mortgage on the house.

My mortgage payment keeps rising and I can’t afford it anymore!

The stability aspect to this plan will help homeowners who are facing rising mortgage payments due to resetting rates to keep their homes.  If you are homeowner who is current on their mortgage but about to default on the payments then the following might apply:

  • Reduced monthly mortgage payments.
  • The monthly payments will be lowered so they are no more than 31% of income.
  • This reduction will apply for 5 years after which the rates will gradually return to the original level.
  • Up to $1,000 per year for 5 years in loan reduction paid for by the government if the mortgage stays current.

When does the refinance plan start?

The homeowner plan starts on March 4, 2009 when the final details will be released.  Mortgage lenders will be contacting eligible homeowners after this time.  Please contact your mortgage provider if you have any inquiries.

What paperwork do I need?

  • Income documentation – pay stubs or other proof of income.
  • Most recent tax return.
  • Payment amounts for any outstanding credit card balances.
  • Payment amounts on any other loans you have such as car loans, student loans, personal loans.
  • If there is a second mortage then you need to provide information on that.

Top 5 foreclosure states in January, 2009

  1. Nevada  1 in 76
  2. California 1 in 173
  3. Arizona 1 in 182
  4. Florida 1 in 214
  5. Oregon 1 in 357

Other info

$8,000 first time home buyer credit extended.