Qualifying for the Obama Housing Plan

[Mar 20, 2009.]

 

Homeowners who aren’t sure whether they qualify for help through the Obama administrations new housing plan can turn to a government site for more information. The site, makinghomeaffordable.gov, has a checklist for people to determine their eligibility for the Making Home Affordable plan.

The housing plan is aimed at helping up to 9 million Americans stay in their homes. Only homeowners with loans owned or securitized by Fannie Mae or Freddie Mac can qualify for assistance. The plan allows mortgages to be either refinanced or modified to make payments more affordable.

Refinancing a Mortgage

People whose homes have lost a lot of value may be eligible for refinancing their mortgage loan. The amount of principal owed will not be reduced, but homeowners could see a significant reduction in the amount of interest paid over the life of their loan. To be eligible homeowners must:

—Live in their home

—Be current on loan payments

—Have enough income to make new mortgage payments

—Have an unpaid balance on their first mortgage of no more than 105% of the market value of their home.

Mortgage Loan Modification

Homeowners who are struggling to pay their mortgage and may already be behind on payments may be eligible to have their loan modified. To be eligible homeowners must:

—Live in their home

—Have an unpaid balance on their mortgage of less than $729,750. Multi-family properties have a higher limit.

—Use more than 31% of their gross income for mortgage payments

—Have difficulty making mortgage payments, possibly because of a job loss or other hit to their finances.

Homeowners who qualify for the modification plan will receive a lower interest rate and up to $5,000 to help reduce their principal. Borrowers should contact their lenders to find out if they are participating in the loan modification program since they are not required to do so.

Counselors approved by the Department of Housing and Urban Development (HUD) are available to help homeowners determine whether a refinance or loan modification is the best plan. People applying for assistance will need to provide information on their income, mortgage loans, other credit cards and debts, second mortgages, home equity lines, and most recent tax return. They’ll also need to be able to provide proof of any change in their financial situation, such as huge medical bills.

 

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.