Obama Refinance Plan Encourages Homeowners to Get Lower Interest Rate
As many real estate agents and Realtors know, the housing bubble bursting has made the passion for selling houses a little less enjoyable. With more homes for sale than number of people interested in buying property, many Realtors and agents must become savvier to make the sale. There may be help on the way though.
Approximately three years ago, the Obama Administration tried its hand at aiding the housing market recovery with the Home Affordable Modification Program, or HAMP, and the Home Affordable Refinance Program (HARP). To date, the programs have helped a couple of million Americans retain their homes. The latest Obama refinance plan seeks to resolve the housing market crisis.
Who Benefits From the Obama Refinance Plan?
The previous plans concentrated on Americans with government-backed home loans from Fannie Mae and Freddie Mac. For example, the HAMP program sought to prevent further foreclosures which are currently fueling the housing market crisis. However, the 2012 plan looks to help property owners with non-government backed, private bank loans.
The same borrowers who could not qualify for the HARP program, which assisted homeowners who owed more money than their homes were worth, can receive help. Now, the Administration encourages borrowers in the same position (owing more than the value of their homes) to lower their mortgage interest rates. The homeowners must not be in or close to defaulting on their mortgages. Eligibility requirements include:
- No missed payments within six months prior to applying
- Previous six months (prior to six months of current payments) a minimum of one late payment
- Credit score of at least 580
- Own and occupy the property
- Be within the same limits for the government-back loans in their neighborhoods ($271,050 to $729,250)
Borrowers, who qualify, could substantially lower their month mortgage payments. The plan also includes another refinance option. A homeowner could choose to refinance her 30-year mortgage into a 20-year loan. Although this won’t lower her interest rate, it allows her to pay off the mortgage 10 years earlier than the original loan.
Who “Pays” for Lowering Interest Rates?
The proposal, outline in February, is estimated to cost about $10 billion. Under the Obama refinance plan, imposing a fee on large banking institution shoulders the burden of lowering interest rates, not the deficit. The ultimate goal of encouraging homeowners to lower interest rates is to boost the housing market and economy.
You can learn more about this option for homeowners looking for some relief by talking to one of our mortgage consultants. Click the button below to fill out a form and get in touch with a HARP specialist.
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