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The Obama Plan – Can it help you?

Fannie Mae and Freddie Mac have just released details on how they will handle refinance transactions authorized by the Home Affordable Refinance program. This program is intended to reach millions of responsible homeowners who are struggling to afford their mortgage payments because of the current recession, yet cannot sell their homes because prices have fallen so significantly. In the current economy, in which 5.1 million jobs have been lost over the past 15 months, millions of hard-working families have seen their mortgage payments rise to 40 or even 50% of their monthly income – particularly if they received subprime and exotic loans with exploding terms and hidden fees.

Basic guidelines require that the home is an owner occupied property, that the mortgage be owned by Fannie Mae or Freddie Mac, and that it must be current on payment. You must also have stable income sufficient to make the payment. To know if your loan is owned by either of these entities all you have to do is call your loan servicer, or call us and we would be happy to help. Details of the plan allow a loan to value of up to 105% of the balance owed. This applies strictly to first mortgages only. Any second mortgage or Home Equity Line of Credit will have to subordinate to the new first mortgage. This is strictly a rate and term refinance, cash out is not allowed with this program. The loan size limits are based on conforming loan limits in the county you live in. All loans refinanced under the plan will have a 30- or 15- year term with a fixed interest rate.

The interest rate will be based on market rates at the time of the refinance. Currently, interest rates are at historical lows, which makes this a good time to examine your refinancing options.

Whether you are in the market or not, here are a few things YOU should do right now:

1. If you are not in the market for a loan right now, make sure your credit standing is as solid as possible. Many affected people didn't plan in advance to ensure their credit would qualify them for the best possible financing.
2. If you are in the market for a home loan, or know someone who is - now is the time to work with a real qualified professional who can keep you informed of the changes in the market. Now is not the time to play risky games trying to scour the entire nation to find someone who promises to save enormous costs, or deliver rates that are too good to be true.

Your home and financing are too important, and times have changed. We are here to help and advise during these volatile times - and would welcome calls from you, your friends, family, or coworkers.