March 20, 2009

Government "Making Home Affordable" website

As part of the new initiatives to help homeowners with mortgages they can't pay the government has launched a website Making Home Affordable.

The site has some basic info on the programs and who can qualify.

In short there are 2 programs: refinancing and modification. Below are basics on the programs. For both of these the home has to be your primary residence.

Refinancing:

To be eligible:
Your loan is guaranteed by FannieMae & Fredie Mac.
You are current on your payments
Your mortgage isn't significantly more than what the home is worth.
LTV (loan to value) not to exceed 105%.

You get refinanced at a 30 year fixed mortgage at prevailing rates at around 5%. This type of situation is for people who can generally afford their home but maybe they've got an ARM coming due or otherwise need/want to refinance. But they might not be able to refinance if they are at a high LTV (loan to value) ratio, or in other words they have low equity.

Modification:

This is for people having real troubles. They have difficulty paying their mortgage payments or are already behind on payments. Their mortgage is over 31% of their income.

With modification you can get your mortgage interest rate dropped as low as 2% temporarily and then up to 5% level later and they can extend the loan to 40 years. There are also incentives to pay the borrower and lender.

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