Obama Mortgage: How it Applies to Home Mortgage Rescues

Newly passed legislation about home mortgage modification seems to be the talk around the water cooler lately. But figuring out just how this valuable legislation can affect you as a homeowner and the interest and terms of your home mortgage is difficult. Basically, the Obama plan is centered on two groups of homeowners: the first is those who are facing foreclosure due to missing payments and default, the second is those homeowners who cannot refinance to a better rate due to falling prices in the housing market.

Homeowners everywhere are now eligible to use Obama mortgage stimulus plan, and get a new, lower, monthly mortgage payment through refinancing and mortgage modification. The guidelines in Obamas plan have over $75 billion in funds to help homeowners. This money will be used primarily to give to mortgage lenders and banks who approve \”at risk\” or homeowners facing \”financial hardships\”. This will allow lenders like Ditech to approve more homeowner applications for refinancing and mortgage modification.

The mortgage must be for a home that is the main residence of the homeowner. This means that no vacation, investment, or rental properties are eligible for this stimulus program. Homeowners must be late on payments, or be able to show proof that making payments is extremely hard to do, and soon may be impossible.

Once these qualifications are met, the mortgage lender can determine the amount of the new monthly payment in order to make sure that it is no more than 31% of your pre-tax (gross) monthly income and the interest rate can be as little as 2%. This provides significant savings that can keep the family in the home and allow the home to be its most affordable for them in the future.

Refinancing Your Mortgage Under The Obama Rescue Plan- For mortgage refinancing, the homeowner must live in the home and it must be their primary residence. The mortgage must be owned by either Freddie Mac or Fannie Mae (check with your lender, many mortgages are owned by these two huge entities; you may be unaware of it). The borrower must show that they have enough income coming into to sufficiently handle the mortgage payment, and borrowers cannot take cash out of the mortgage in order to pay on other debts. Also, the mortgage cannot be written for more than 105% of the current fair market value of the home. The mortgage can be refinanced under this option to a fixed 15 or fixed 30 year rate.

Learn more about Obama Mortgage Relief Plan Qualifications.