I’m a responsible homeowner….what’s in it for me?

It seems as though everyone but the responsible homeowner was getting a piece of the government’s money, and American’s were becoming outraged by the country’s spending. Bailout money was being handed out like candy, and corporations and Wall Street were the first in line. We are already seeing that some of these same corporations are back in line, waiting for another hand-out. The housing market is in need of a help. Home prices are dropping…foreclosures are at record highs. We have asked the Government for help. Obama has revealed his new mortgage bailout. Some of the highlights are:

Who qualifies? $75Billion dollars has been allotted to reducing mortgage payments for “at-risk” homeowners. This program is only available to owner-occupied, principal residences with mortgages originated prior to January 1,2009. To qualify, a borrower’s monthly mortgage payment must exceed 31% of their monthly gross income. They must also be able to proof some sort of “financial hardship”, such as loss of income which puts them at risk of default. One key element of this bailout is that YOU DO NOT HAVE TO BE DELINQUENT ON YOUR MORTGAGE TO QUALIFY. One key ingredient of this plan is that your mortgage must be guaranteed by Fannie Mae or Freddie Mac. If it is not guaranteed by either of these government agencies, then you will not qualify for this bailout plan.

What are the benefits of participating in the Plan? If you qualify for the plan, lenders will work with you to reduce your monthly payment by either lowering your current interest rate, thus reducing your monthly payment to be no more than 31% of your gross monthly income, or, in severe cases, increasing the term of your current mortgage to 40 years, reduce your interest, and even reduce your principle balance if you are “upside-down” on your loan. You need to be prepared to “jump through hoops” with all the documentation that the government and lender are going to require.

I don’t qualify. How does this help me? Many Americans are frustrated that those people who made reckless decisions are getting the benefit of the bail-out dollars. But what we must remember is that it is important for all of us to keep our neighbors in their homes since foreclosures can force property values to decrease quickly. Falling property values affect us all.

If your current mortgage is an adjustable rate mortgage, I urge you to try to refinance to a fixed rate, and if you currently have a fixed rate mortgage, it is a great time to refinance to a lower interest rate. Take advantage of today’s historically low rates. If you have VA benefits, it is a great time to use them. With plummeting home values, many American’s have seen a reduction in their equity. Without having 20% equity in your home, you will be forced to pay PMI (Private Mortgage Insurance) which can increase your monthly premium by $100+ dollars every month. With VA, you do not have any PMI, so home equity is not needed to refinance. Contact your Lender to discuss ways to lower your monthly payment. You might end up saving hundreds of dollars each month!!

Until next time….