The 'Making Home Affordable' Program: Will it Help You? By Marlon Baugh At Isnare.com Ezine Articles

The Making Home Affordable Program was developed by the Obama administration to help fix the collapsing real estate market. The plan is targeted to assist about 9 million home owners who may be eligible to refinance or do a loan modification.

There are two main categories that this program won’t help, which are homeowners who make sufficient income and make their payments on time, that have seen a significant decrease in the value of their homes and also if your loan is not owned by Fannie Mae or Freddie Mac will make home owners ineligible. The other category of home owners that this program won’t apply to are homeowners that no longer have income due to a job loss.

The Making Home Affordable Refinance Program will allow eligible homeowner’s whose loan is owned by either Fannie Mae or Freddie Mac to refinance into a more affordable fixed rate mortgage loan.

Here are some of the guidelines to qualify for the Making Home Affordable Refinance Program.

- This only applies to primary residences and no investment or second homes.
- The last 12 months of mortgage payments have to be on time, so no late payments within the last 12 months.
- The amount owed must be less than 105 percent of the current market value of the property….so if you live in areas that have seen a significant decrease in values, such as Florida…sorry you wont qualify.
- And last but not least, you must be able to document a stable income source.

The good news is if you have a subprime loan which include an adjustable rate mortgage, interest only loans or balloon loans, then you will see some benefit from this program.

This program will not reduce your principal balance significantly, nor will it allow you to get cash out. Now if you already have a low fixed rate mortgage and have gone a few years into your loan already, then this plan may not be for you as the cost involved to refinance may not make financial sense.

Now if you don’t qualify for the Making Home Affordable Refinance Program, then you can consider the Making Home Affordable Loan Modification Plan. Here are some of the guidelines.

The property must be your primary residence with a mortgage of no more than $729,750 on your first mortgage and your total monthly payment which include your current mortgage payment, property taxes, insurance and association fees if applicable, cannot exceed more than 31 percent of your monthly gross income.

You will also have to demonstrate a hardship that explains why you are having a hard time making on time payments, whether its because of a rate adjustment or loss of income, just to name a few.
Unlike the refinance program, this loan modification program allows and accepts home owners that are currently behind on their payments.

The rates for this loan modification plan ranges between 2 % - 5% and the terms of the loan can be extended up to 40 years to make the payment affordable. Home owners that enroll in the loan modification plan and that make their payments on time will see an incentive of up to a $5000 reduction in their principal balance.

If you happen to not fit into either the Making Home Affordable Refinance Program or the Making Home Affordable Loan Modification Plan, then its important to note that you lender or servicers still have other options for you.

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