Obama Uses the Home Affordable Refinance Program as a Stimulus Package for Homeowners

A major part of the Obama stimulus package to get the economy up and running again is to jumpstart the housing market by offering financial solutions for existing homeowners who are unable to meet their monthly mortgage payment. One option is to refinance existing mortgages through the Home Affordable Refinance Program known as HARP. Another, more popular option is to modify existing loans through the Home Affordable Modification Program known as HAMP. The right course of action to choose depends on each individual’s financial situation and on what kind of mortgage they currently have. If a borrower is up-to-date on his payments, he might be able to refinance and get a much lower interest rate. Government backed lenders including Fannie Mae and Freddie Mac will cooperate and let the owner refinance on loans they own. To determine your eligibility, you need to find out if your mortgage is owned or is backed by Fannie Mae and Freddie Mac. There are toll-free numbers you can call to find out. For Fannie Mae the number is 1-800-7FANNIE. For Freddie Mac, the number is 1-800-FREDDIE. You can also access them through the internet at www.fanniemae.com/loanlookup and www.freddiemac/com/mymortgage. You must also be up-to-date on your mortgage and the amount you owe cannot exceed 125 percent of the property’s current market value. You will also need to provide evidence that you can make future payments and the lender must determine that refinancing will help keep your loan stable and affordable.That last factor is important. A lender will provide you with an estimate and a Truth in Lending document where your new interest rate, payment and total payments are reflected. This will be compared to your current mortgage and terms. If you won’t be saving money, then this option might not be in your best interests. However, if you already have an adjustable rate mortgage, refinancing and getting a fixed rate loan might be the stability factor the lender wants to see. Although your payment might be slightly higher, over the long term it can actually save you money.

Source by Bryan Hendersen

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