What is the stimulus refinance loan? In response to the recent housing troubles, which has many responsible homeowners facing foreclosure or already out of their homes due to exploding mortgage rates, the Obama administration has made refinancing loans available to certain qualifying home owners. Seventy-five billion has been allocated to this program. Home owners who qualify can refinance their homes for a 2% fixed rate. This is great news for anyone having trouble making their loan payments, but the big question is, who qualifies?
Paying On Time
The key to the stimulus refinance loan program is to help out honest home owners who are caught in a bad spot and are in danger of getting behind on their loans, but have remained responsible and paid every month on their mortgages. This is to keep honest home owners in their homes and avoid having more home owners going into default and getting their homes foreclosed. Therefore, to qualify for the stimulus refinance loan, a home owner must have been paying their mortgage every month, in full, without being more than 30 days late. However, late fees and any late payments under 30 days are okay. These home owners will still qualify for the stimulus refinance loan.
Declined House Values
For those home owners who have seen their home’s value go down by 15% or more due to the mortgage crisis and the popping of the housing bubble, the stimulus refinance loan program is there to help. These home owners can also take advantage of the low 2% fixed rate, because they original payed much more for their homes than what the current property value has gone down to.
If a home owner has, since purchasing their home, lost their job or has had a drastic cut in hours, they, too, may qualify for a stimulus refinance loan by signing a letter of financial hardship.
There is also the route of loan modification. For home owners who go with a loan modification rather than the stimulus refinance loan, their mortgage payments will go down to 31% of their monthly income. The reason behind this is that HUD suggests no person spend more than 30% of their monthly income on rent or mortgage payments. For some home owners, this will be a better choice than the stimulus refinance loan. Home owners should do the math and figure out whether this is a better option for them.
There are definitely plenty of options for home owners who are finding themselves in trouble. For those who may not be able to afford their home loans for much longer, the stimulus refinance loan is a very good way to make their mortgages affordable again.