Obama offers a way for borrowers to refinance their existing loan into a mortgage with more favorable payment parameters. This helps homeowners in financial trouble to reduce their mortgage payment.
The Home Affordable Refinance Program (HARP) allows homeowners to restore an adjustable rate mortgage with a fixed rate mortgage. Often owners are allowed to avoid a mortgage payment until the next reset date that would otherwise send their loan installments through the roof and homeowners through foreclosure.
Program a Success
The Obama assistance program for affordable home refinancing has ultimately been a success. The program continues to help people avoid mortgage delinquencies and make their homes affordable. For much of last year, mortgage rates were at or near record lows. Unfortunately, many homeowners have not been able to take advantage of these due to the decline in their home equity.
Homes That Lost Value
Many houses have lost much of their value. Many homeowners now owe more on their mortgage than their home is worth (this condition is called being “underwater” or ” upside down” in ones mortgage). Homeowners who lack equity in their homes are often unable to meet the standards of the loan required by lenders in order to refinance their mortgage.
These borrowers may be missing thousands of dollars in profits. When economic times are good, we look at refinancing options as a good alternative to get cash from our homes or to get a better mortgage rate.
Now homeowners who are struggling just to stay in their homes can look to refinancing with the intention of obtaining relief from underwater mortgages or mortgage payments they can no longer afford.This arm of the stimulus plan for mortgage relief from the Obama administration gives more than 9 million struggling homeowners a refinancing option within a 4. 5% fixed rate.
The remaining amount of the mortgage should not exceed $ 729, 500. The owner must live in the home to be refinanced and it must be his or her primary residence. Personal income levels must be verified through the use of tax returns or pay stubs. The stimulus program is made for struggling homeowners.
Obama Refinance Eligibility
The Obama refinance program is not for everyone. Both the homeowner and therefore the existing mortgage owner or financial institution must meet certain general requirements to participate in this government mortgage assistance program.
As a rule, almost all mortgage assistance programs require a number of financial difficulties to be present in order to qualify for homeowner aid. In other words, there needs to be a legitimate reason why the homeowner needs help to refinance.
The homeowner must be current on all mortgage payments to qualify for the mortgage assistance program from the government. If the debt exceeds the amount of the loan you are not eligible. The mortgage refinancing should reduce the overall payment of the mortgage. Remember that both the homeowner, plus the existing mortgage loan company must comply with all applicable qualifications to apply for HARP.
Fixed or Adjustable Rate
You can choose a fixed rate mortgage or adjustable rate mortgage for your new mortgage. If you decide on a fixed rate mortgage, you can fund more than 105 percent of the value of your home, but if you choose a variable rate mortgage, you can not finance more than 105 percent.
Mortgage insurance is not required if your existing mortgage does not already have mortgage insurance, which is nice as it will keep your payments become even lower.