Obama's Stimulus Package For Mortgage Refinancing and Loan Modifications Incentive Programs

By Brian R Stephens

The US government under Obama's leadership have produced a stimulus package for mortgage refinancing programs designed to assist people who are facing foreclosure on their homes. The loan modifications incentive is primarily geared towards people who are struggling with mortgages on their homes and is not really intended to help out people who have houses sitting empty.

There are 2 options available, providing the criteria for qualifying for the packages are met.

Mortgage Refinancing

This is where an existing mortgage that is owned or guaranteed by one of the two large lending agencies Fannie Mae (Federal National Mortgage Association or Freddie Mac (Federal Home Mortgage Corporation)can be refinanced to take advantage of lower rates of interest. The qualifying criteria: -

• The loan is not more than 105% of the house valuation
• You are up to date with your repayments
• Your circumstances have not changed to the extent you will not be able to afford the lower payments e.g. you still have an income that is enough to meet the payments

Loan Modifications

This is where you change the terms of your current loan (mortgage) through your existing mortgage company providing that they are participating in the program and that you meet the qualifying criteria: -

• Your total payment that includes interest, taxes and insurance is more than 31% of your gross income.
• The mortgage must be on your principal family home where you are currently living
• Your mortgage balance is not greater than $729,750
• You got your mortgage before the beginning of 2009 i.e. not on or after the 1st January 2009.
• You will also be required to make the modified payments over a trial period of 3 months to prove you can finance the new deal