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Mortgage Refinance: Obama’s “Making Home Affordable Program”

Many of you by now have heard in the news about  how the Obama administration has been working with mortgage lenders called the “Making Home Affordable Program” to help deal with the housing crisis that has affected many homeowners in the past year or so.

There are 2 separate programs available in the plan.

The first one is basically a loan modification program in which the lender that services your loan, is going to look to modify the loan terms for you in order to prevent you from foreclosure. However at this point, it is still fairly vague on what or how the modification terms will be like in relation to what the lenders are willing to offer.

The Obama administration has worked on setting some details and guidelines as to what they would like to see lenders do to assist purchasers. Some of these things include:

a) Offering an extension of a loan from a 30 year mortgage to a 40 year mortgage term in which could help bring down the monthly payments.

b) Adding the interest due on the loan to the back end of the over all mortgage loan.

c) Lowering the interest to a more affordable rate and have that rate slowly increase over the next couple of years

The loan modification part of the program is designed primarily to help people who are currently in their home but may have had some problems with making some payments on time, or the loan is currently past due at this point. The idea is to have lenders help out homeowners who are in trouble by allowing certain modifications that will make home loans a little more affordable.

This program is only going to be open to loans that are owned by Fannie Mae or Freddie Mac. However if your loan is not backed by Fannie Mae or Freddy Mac, there are still options in which a homeowner can get help in modifying or refinancing their loans.

If you fall into the latter category, the best thing to do is to contact your servicing lender on what loan options may be available and they could possibly give some advice or help point you in the right direction.  Remember, that you are not alone in this situation.

Lenders don’t what to see you lose your home because they don’t want the responsibility of having a liability on their hands. So it is in their best interest that they do what they can in order to help you keep your home.

In foreclosure need to refinance

The other part of Obama’s  “Making Home Affordable Program” is basically a  home refinance plan. If you qualify, they will refinance your current mortgage loan into a much lower and affordable rate. However, having said that, this program is not intended for people who are in trouble or behind on their payments. It is intended for those who have been looking to refinance but have had difficulties due to property devaluation, or the tightening up of some underwriting guidelines which may have made a regular refinance impossible to do.

For the refinancing part of the program, details are still a bit vague since the plan is relatively new, many homeowners will be interested on how they can take advantage of the program. Your current lender may be bombarded with questions in regards to these new implementations so you might want to search online for as much information as possible in regards to this .

However, there are certain restrictions and guidelines for refinancing and in certain cases it may not necessarily be of great benefit for all homeowners, even though the plan can help those who qualify, the program will not be available to everyone.