Obamas’ New Making Home Affordable Program And How It Affects Loan Modification San Diego Homeowners
More Details on the new housing plan were announced today from the Obama Administration.
The new plan has been named “Making Home Affordable Initiative.”
How does the new program Affect California Homeowners?
The new plan consists of two parts. The first plan addresses certain underwater or upside homeowners who were looking to refinance at a lower rate, and the second part addresses homeowners who are facing a hardship situation by lowering their home payment through loan modification San Diego homeowners benefit from this program.
Requirements of eligibility for both programs can be found at the financial stability website.
Part one of the program- The “Home Affordable Refinance” program, states that the program is for homeowners that have seen the value of their homes would be afforded the opportunity to refinance at a lower rate as long as the rate was what is called a conforming loan rate (Home loans of $729,750) or less owed. These new loans would be backed by Freddie Mac and Fannie Mae. Under the new lending provision the conforming 20% home loan to value would be waived. Under this provision you would be able to refinance the principal portion of the loan up to 105% of the appraised loan value. Under this program the government is expecting this program to help 4-5 million American homeowners to avoid a loan modification San Diego homeowners will benefit from this refinance program by lowering their home payments to a more affordable monthly payment.
The second part of the program- “Home Affordable Modification” program. This program is aimed at distressed homeowners that have faced a Financial hardship such as a loss of income, job loss, or illness, a rate adjustment on their loan to mention a few. The Government is offering loan assistance in the form of subsidies to lenders to motivate them to offer a home loan modification on their loans.
Under the new provisions of the loan modification program lenders would have the ability to reduce the interest rate down by 2% for a maximum of five years. The lender would also have the option of adjusting the length of the loan term up to 40 years. The lender would be paid back in a balloon payment when the home is refinanced or sold in the future. Note: this balloon payment will probably accrue interest until paid off. Each case will be handled on a case by case basis.
Under the governments’ new Making Home Affordable program. Loan modification San Diego homeowners could receive a reduced interest rate below the market rate would see their reduced rate increase by 1% per year. Example: If you have a $250.000 mortgage at a reduced rate of 4%, your principal and interest payment would be $1,193.58 a month. The following year the rate could increase by 1%, and the new payment would be $1,342.05 a month. The good news is that the maximum rate increase would be what the rate was when the home loan modification agreement was signed.
