“Making Home Affordable” Plan
The current economic difficulties have made millions of homeowners devastated. Many of them find themselves in the situation when their mortgage is worth more than their home’s market value. Improving the situation in the housing market, helping out homeowners, and preventing foreclosures are the key issues President Barack Obama addresses in his “Making Home Affordable” plan. This is a housing and homeowner mortgage refinance or modification stimulus plan, designed to stabilize the housing market and help up to 7 to 9 million Americans reduce their monthly mortgage payments.
This stimulus plan is meant to make monthly mortgage payments more manageable for homeowners and help millions of Americans to save hundreds per month, or avoid foreclosure. This can be achieved by using part of the $75 billion homeowner bailout package, approved by congress.
There are millions of homeowners who pay 40% or even over 50% of their income to their mortgage. Homeowners, who consider refinancing or modification of their current home loan, can use this plan to get a mortgage payment that is equal to or less than 31% of their gross monthly income. A 15% or 20% reduction is a great help in these cases.
The plan comes along with a set of guidelines for mortgage lenders and banks. About one-quarter of Americans with mortgages could be eligible for the stimulus plan. In case the home you want to refinance is your primary residence, the loan on your home is controlled by Fannie Mae or Freddie Mac, you have sufficient income to support new mortgage and you are current on your mortgage payments, you qualify for the refinance. However, you can’t owe more than the current market value of your home (you can owe between 80-105%, but no higher than 105%).