President Barack Obama's ambitious mortgage stimulus plan is geared towards helping the housing market by helping homeowners who are at risk of losing their home. This $75 billion program will help nearly 5 million people keep their homes, and avoid foreclosure or mortgage default. This is because of new mortgage refinancing and modification options which are now available for nearly all homeowners. Here are 4 things you should know about President Obama's mortgage stimulus.
1) Affordable Monthly Payments is the Goal
A big part of this stimulus program is founded on the idea that if homeowners can make their monthly mortgage payments, they will not lose their home. Even if they have a home that is losing, or has lost, value, they will still remain in their home. This is a risk on the Governments part that has enabled a lot of people the chance to get help and refinance or modify their home loan into an affordable monthly payment.
2) Keeping Monthly Payments Low
To standardize what an affordable monthly home loan payment is, the stimulus program requires mortgage lenders or banks who help homeowners to not let their monthly loan payment exceed 31% of their gross monthly income. To achieve this, mortgage interest rates will be lowered, to as low as 2%, or the length of the home loan will be extended.
3) Cash Incentives to Help Homeowners
Mortgage lenders and banks are encouraged to offer this program as an option for homeowners at risk of losing their home. To push the plan, lenders and banks will receive money for every homeowner they help, and more money every year, for up to 5 years, the homeowner is able to make payments. The homeowner will also receive a $1000 incentive every year, for up to 5 years, they make their home loan payments on time and in full.
4) Financial Hardships
Homeowners are encouraged to use this plan to refinance or modify their mortgage even if they are in a financial hardship. Many homeowner have lost their jobs, have reduced incomes, or are facing other financial problems. Even homeowners with bad credit or an upside down mortgage can use this stimulus plan for home loan help. A homeowner claiming to be facing financial hardships will need to write a letter verifying the reasons why. This may actually help a homeowner get an even better mortgage when they refinance or get mortgage modification.
APPLY HERE: For Obama's Updated Refinance Plan
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