We have received a number of calls related to the Obama Housing Plan. This plan is in place to allow homeowners to refinance or modify their mortgages.
There are two parts to the plan. The first is to allow homeowners that owe more than 80% of the value of their homes refinance and the second is to allow borrowers that can no longer afford their monthly payments modify their loans to a lower payment.
As with all loan programs, there is a qualification process. The first qualification is that your new mortgage payment cannot exceed 31% of your monthly income. If you total debts including the new mortgage payment exceeds 55% of your gross income, you will need to get credit counseling through a HUD approved counselor.
The second qualifying factor looks at when you took out your existing loan. This program is only available for borrowers who took out their existing loan prior to January 1, 2009.
This program is only for your primary residence, second homes and investment properties do not qualify.
Your loan amount cannot exceed Fannie Mae or Freddie Mac limits which are based on your area. Any loans above the limit, Jumbo loans, do not qualify.
You do not need to be behind on your payments but must prove financial hardship. This means you cannot pay your mortgage at its existing level. You must have verifiable income so if you are unemployed or self-employed and show a net loss or little net income on your tax return, you will not qualify.
Once you qualify for the plan, the lender will follow a series of steps to get your payment to no more than 31 percent of your gross monthly income. The steps are in the following order: lower your interest rate, extend the term up to 40 years and then defer principal.
The interest rate reduction will remain in effect for five years. After that, your rate will gradually increase by 1% per year to the Freddie Mac Primary Mortgage market survey rate at the time of your loan.
If you make timely payments for 5 years, the lender will be able to cut your principal by up to $1,000 a year for each year. To qualify, the modification must reduce your monthly payment by a minimum of 6%.
If you have a second mortgage, the lender must agree to remain in second place.
If you currently do not have mortgage insurance, you will not be required to obtain it with the new loan modification.
If you are “underwater” on your loan, this plan will allow you to go up to 105% of the value of your home. There is talk of this plan increasing the limit to 125% in the near future.
As you can see, this is a nice plan for people who fit in the box. If you do not qualify for this plan, there are still a number of other loan programs to help you accomplish your goals. Give us a call, we are happy to help you!
We have received a number of calls related to the Obama Housing Plan. This plan is in place to allow homeowners to refinance or modify their mortgages.
There are two parts to the plan. The first is to allow homeowners that owe more than 80% of the value of their homes refinance and the second is to allow borrowers that can no longer afford their monthly payments modify their loans to a lower payment.
As with all loan programs, there is a qualification process. The first qualification is that your new mortgage payment cannot exceed 31% of your monthly income. If you total debts including the new mortgage payment exceeds 55% of your gross income, you will need to get credit counseling through a HUD approved counselor.
The second qualifying factor looks at when you took out your existing loan. This program is only available for borrowers who took out their existing loan prior to January 1, 2009.
This program is only for your primary residence, second homes and investment properties do not qualify.
Your loan amount cannot exceed Fannie Mae or Freddie Mac limits which are based on your area. Any loans above the limit, Jumbo loans, do not qualify.
You do not need to be behind on your payments but must prove financial hardship. This means you cannot pay your mortgage at its existing level. You must have verifiable income so if you are unemployed or self-employed and show a net loss or little net income on your tax return, you will not qualify.
Once you qualify for the plan, the lender will follow a series of steps to get your payment to no more than 31 percent of your gross monthly income. The steps are in the following order: lower your interest rate, extend the term up to 40 years and then defer principal.
The interest rate reduction will remain in effect for five years. After that, your rate will gradually increase by 1% per year to the Freddie Mac Primary Mortgage market survey rate at the time of your loan.
If you make timely payments for 5 years, the lender will be able to cut your principal by up to $1,000 a year for each year. To qualify, the modification must reduce your monthly payment by a minimum of 6%.
If you have a second mortgage, the lender must agree to remain in second place.
If you currently do not have mortgage insurance, you will not be required to obtain it with the new loan modification.
If you are “underwater” on your loan, this plan will allow you to go up to 105% of the value of your home. There is talk of this plan increasing the limit to 125% in the near future.
As you can see, this is a nice plan for people who fit in the box. If you do not qualify for this plan, there are still a number of other loan programs to help you accomplish your goals. Give us a call, we are happy to help you!