Archive for February, 2009
February 23rd, 2009 categories: Prescott Real Estate Trends, Real Estate News
Many of us are wondering, “What does Obama’s housing plan mean to me?
That’s a great question and the bottom line is we just don’t know yet. It’s going to take a few months for us to see the plan in action. Here are a few basics about the program.
The Homeowner Affordability and Stability Plan includes two initiatives to help struggling homeowners. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth.
The second program attempts to lower monthly payments for homeowners at risk of losing their home. In addition, the plan includes a third initiative to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac.
Refinancing Initiative
Under current rules, those families who own less than 20% equity in their homes may have a difficult time refinancing and taking advantage of the historically how interest rates. Therefore, the refinancing initiative in the new plan provides refinancing help for homeowners with less than 20% equity in their homes or who owe more than their homes is worth. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth. According to the plan, “credit worthy” or “responsible” homeowners can refinance their mortgage into a 30 or 15 year fixed rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year. As with the rest of the plan, details about this initiative will be released at a future date including what, if any, credit score requirements will be included. This initiative aims at providing help to individual families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly.
