How to Save Your House with the Obama Refinance Plan for Homes
Underwater mortgages: they're a real problem in the U.S. With the real estate market still on a delicate recovery path, foreclosure rates are still high in most states and many buyers are still struggling to keep up with their repayments. The Obama Refinance Plan could therefore be a lifeline to millions.
It is a mass refinance plan that will help borrowers to make significant savings every month and it will give the still low real estate market a much needed boost. The plan aims to lower interest rates which will lower monthly repayments. The new Obama Refinance Plan is an expansion of the HAMP program of January 2012 and the HARP 2.0 mortgage program that came in late 2011.
HARP stands for Home Affordable Refinance Plan which has also come to be known as the Obama Refinance Plan, the Making Home Affordable Plan, Relief Refinance or the DU Refi +. It was started by the government in April 2009 to boost the ailing real estate market that took quite a hit when recession hit.
The plan is made for those the President calls responsible borrowers whom it aims to help save up to $3,000 a year. The President's definition of responsible borrowers is those who are up to date with their payments for the last six months or have only one late payment over the last year. Borrowers must also have a credit score of not less than 580 which is significantly lower than the conventional score buyers previously had to have of 640 and above.
In addition to this, applicants must also have a loan that conforms to the FHA limits for the different counties. The loan limits vary depending on the location of a home but it generally ranges from $271,050 to $729,750. Also, the loan is limited to borrowers who are refinancing their primary residence.
HARP plans have previously been limited to those whose loans are backed by Fannie Mae and Freddie Mac with a loan to value of under 125%, and must stay with the current servicing lender. The new Obama Refinance Plan has been opened up to be of assistance to those whose home loans are backed by other lenders which will let in millions of mortgage holders who have been previously locked out of other mortgage assistance programs. It also takes away the LTV cap.
The application process is also more streamlined which the goal of making the application process shorter and more efficient. The provisions made to ensure this include the removal of the appraisal process, the tax returns requirement and verification of employment being applicable to employed applicants only.
No closing costs
Another provision of the Obama Refinance plan is that closing costs are paid on behalf of applicants. The goal is to encourage borrowers to direct the savings realized through refinancing towards building equity. This provision is available if one refinances with a loan that does not have a duration of more than 20 years. Also, the monthly repayments one is making have to be equal or not too far apart with those on the loan one currently has. It is with this provision that the President aims to enable borrowers to save up to $ 3,000 annually.
The Obama plan estimates costs is $5 to $10 billion which is to be drawn from a newly proposed fund known as the Financial Crisis Responsibility Fee. The fee is charged to the country's major financial institutions which will ensure that the Federal deficit does not go up at all to cover the cost of this refinance plan.
Talk to a HARP specialist today at AmeriFirst Home Mortgage. Click the button below to fill out our contact form. Be sure to put "HARP refinance" in the message area so we know that's what you're asking about.