Are you one of the many Americans becoming overwhelmed by all the economic reform proposals, stimulus packages, and initiatives for this, that and the other thing? Join the club!

Recently, the Obama administration announced formal details regarding one of the latest initiatives, the “Making Home Affordable Program”, designed to assist an estimated nine million families refinance or modify their mortgages in order to be able to maintain their homes through more affordable payments. This blog post is a follow-up to the initial loan modification details post on March 5th.

A key initiative of the program involves assisting responsible homeowners in refinancing their mortgage loans at the historically low interest rates currently available. As there has been significant speculation regarding details of this plan, we have prepared a list of FAQ’s in hopes of clarifying some of the key aspects of the program for our readers, as follows:

What are the Eligibility Requirements?

• You must be the owner-occupant of your home (includes up to four units if a multiple dwelling).
• You must be current on your mortgage payment, and not be “underwater” on your loan balance (ie, the amount you owe should not exceed the value of your home).
• Your mortgage is owned or controlled by Fannie Mae or Freddie Mac.
• You have sufficient documented income to support the revised mortgage payment.

What will the interest rate and terms of the refinance be with this program?

• The interest rate will be determined based on current market rates during the refinance process. All loans refinanced under this plan will have fixed interest rates, and either a 30 or 15 year term.

If I owe more than my property is worth or am delinquent on my mortgage, what are my options under this program?

• If your mortgage balance exceeds 105% of the current market value of your property, your loan is not eligible for the refinancing initiative. If you are delinquent on your mortgage you will not be eligible for refinancing either, but you will most likely be able to utilize the modification initiative (more details here). We recommend you contact a reputable mortgage loan officer to discuss your options.

Will the amount of my loan be reduced by refinancing?

• No, the principal amount will remain the same, but you will save money over the life of the loan through reduction in the amount of interest paid.

Will my payments be reduced under the refinancing program?

• Most likely, contingent on the interest rate on your existing loan. If you have a sub-prime mortgage the refinance to a fixed (low) rate will ensure you are not subject to future payment increases due to escalating interest rates.

Does the program allow homeowners to pull cash out for other expenses?

• No, only costs directly involved with the transaction such as title and appraisal costs can be included in the refinancing package.

For additional information on all aspects of loan modification, we recommend you read this article. Good luck!

Related posts:

1. An Easy Way to Determine Eligibility for the “Making Homes Affordable” Refinance Program Yeah, we know, another article on mortgage restructuring. We are...
2. New Loan Modification Program – The Details Have you been waiting for the new mortgage restructuring program...
3. A Good Forclosure Defense: Home Affordable Modification Program (HAMP) Many people are facing foreclosure today. If you are one...
4. Restructuring Mortgage Programs For Underwater, Subprime and Jumbo Loans The “Making Homes Affordable” Program introduced by the Obama administration...
5. Is It Illegal if My Bank Won’t do a Loan Modification? Q. I am having great difficultly getting a loan modification...