Regardless how much talk and information there is about refinance options under the Obama program, confusion about what to do and what can be done still exists – on a large scale. President Obama’s goal is to help people stay in their homes. Those who understand how to use Obama’s Stimulus Plan to refinance an upside down mortgage will profit tremendously.
The Obama Housing Stimulus has two parts. Part One: For those who are already delinquent due to unaffordable mortgage payments, mortgage modification exists. For those that qualify, a mortgage modification will reduce the monthly housing expense to a specified percentage of monthly income. Qualification normally depends on status of mortgage payments, current interest rate and ability to pay. To take advantage of a modification, borrowers should contact their mortgage lender. Housing counselors can also be of help. Homeowners are cautioned against paying upfront fees to third parties for the purpose of mortgage modification. There are countless stories to be told about homeowners paying thousands of dollars in fees and never getting the modification.
Part Two: This is a different category and program for those who cannot refinance because they are underwater or upside down on the loan, but not delinquent. This means the home value is less than what’s owed on the mortgage loan. For sure, at any time prior to now, there was zero possibility of refinancing such a mortgage. But under the Obama program, a conventional mortgage can be refinanced if the new loan will not exceed 125% of the value of the home. Often, an appraisal is not required. The program is temporary.
Take this example: Homeowner owes $200,000 on the loan. The home value is only $180,000. This homeowner could refinance and get a lower rate and payment if the new loan does not exceed $225,000. What a great opportunity that any homeowner should take advantage of while it lasts. Income and credit guidelines still apply but are not problematic for most borrowers..
To make the new payments as affordable as possible, homeowners can choose mortgage programs other than the 30-year fixed. As common as the 30- year fixed loan may be, many borrowers can lower their payments by hundreds of dollars each month by selecting other options. Using this strategy with the Obama Stimulus Plan to refinance an upside down mortgage will keep a lot of extra dollars in the homeowner’s pocket.
If you need more details about how this works, give me a call.
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I owned a small residential construction business that I recently had to close. I had a lot of personal guarantees with suppliers on accounts I could not pay. This forced us to file for bankruptcy personally. Now that my wife and I (she worked in the bus. Also) are out of a job we have gotten behind on mortgage and other payments. Since I am an officer of a Corporation (which we filed to close) I am not eligable for unemployment. I have no job and no income. We have 3 kids under age 7 and we are in trouble. Apparently there is no help available to us unless I have some kind of job and I get current on my mortgage payments, so I was told by my mortgage company. Is there some kind of help available that anyone knows of????
@david - Sorry to hear this David. I wish there was more I could do to help. For now, I can share that some lenders have advertised that they ARE trying to help borrowers who are unemployed. Read this info from Citigroup – http://tr.im/BFJV. Find out if your lender has such a program. There is a lot of support for this. Read this article from FDIC: http://tr.im/BFO3
I also hear that some lenders might “modify” a loan for unemployed borrowers.
Finding assistance will take a lot of research and persistence on your part to find what’s out there – as you’re doing now. Try searching on Google for – government mortgage help for unemployed -
Your options will much depend on who your lender is AND what type of mortgage you have. If you have a jumbo mortgage (over $417k), your options will be more limited.
Regards and best of luck.
I live in Arizona do you know who I can contact with a program? My funds for paying for this service are limited.
@Athelyn – I do not have “local” sources to recommend in Arizona. But have you tried reaching out to a HUD-approved Housing Counselor? Go to this Government site and follow the links from there.
And try here for HUD counselors and other assistance in Arizona.
These links are all for free help.
For those programs that charge fees, I have not heard of any that will “honestly” put forth the effort to do the work for you at a low fee. And if I were you, I would be very cautious of paying an unknown company for loan modification assistance. There are so many companies that are not doing the right thing – and that’s putting it mildly.
Wishing you the best.