With the nation in crisis, President Obama made plans for Americans. It is called “Making Home Affordable” plan. It is designed to loosen the restrictions for loans–home mortgage finance, to be exact. Many people who are on the verge of losing their home are eligible for these loans.
President Obama intended to boost the real estate market. In the process, he is trying to help homeowners avoid foreclosure. This program helps the people who are negatively effective by the current economic crisis by giving banks incentives for refinancing.
Congress approved the $75 billion bailout package that is designed to help both the banks and the homeowners. The bailout reduces the risk that banks make when approving loans. It also adds dollar for dollar incentives to banks that modify current home loans. This is good news for those who are seeking a home or trying to refinance after a layoff or drop in pay.
The Making Home Affordable plans set guidelines for loan terms. It states the monthly payments should equal 31% or less of the gross monthly income. This benefits many Americans as some pay as much as 50% of their income to their mortgage. Banks can now offer a 2% interest rate if it improves the mortgage to pay ratio.
Homeowners who want to cash in under the new stimulus package must first qualify for the package. In many cases this means a homeowner must sign a Financial Hardship letter stating a reduction of income. If the homeowner financed with Fannie Mae or Freddie Mac, then they may also qualify for the 2% stimulus package.
The stimulus package is a realistic option for those considering refinancing. The Making Home Affordable program can potentially save thousands of dollars. Looking into the new stimulus package may just be the best financial decision you make.
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