Making Home Affordable Refinance Plan: The Differences and Which One You May Qualify For

The President wants to ensure that hard-working homeowners have options open to them in this current recession, so the U.S. has approved a new home loan modification plan. It used to be that people who couldn’t pay their mortgages each month were basically doomed. There was little option other than foreclosure, especially if they didn’t qualify for refinancing. Since the Making home affordable refinance plan is so new, there is a lot to learn about it. Read loan modification FAQ here.

Do you live in the home as your principal residence?
Was your loan originated before January 1, 2009? Is your loan balance less than $729,750?
Does your current payment equal more than 31% of your gross monthly income? Are you facing a financial hardship situation?
Now that you passed that quiz, you must gather together all of your monthly bills, bank statements and income verification. It is best to follow a document checklist so you make sure you have provided your lender with everything they need. An incomplete package can slow down your answer and delay the help you need.

Many homeowners actually owe as much as 5% more on their mortgage than their home is worth. Luckily for these homeowners, this Making home affordable refinance plan from Obama will allow them to refinance or get a loan modification even if they owe more than their homes market value. Situations like this would have been very hard to be approved for when looking into getting a mortgage refinancing or modification, but now with Obama’s plan, more homeowners than ever are eligible.

No more than 30 days delinquent
First loans only-new loan amount equals no more than 125% of current value. Loan owned or serviced by Fannie Mae or Freddie Mac
Income documentation and appraisal may be required or may be waived-case by case basis. The most important thing you can do to increase your chances of success for either program is to learn what your bank needs to see from you and then work on your application ahead of time. Since this is a government sponsored program, the guidelines are standard for everyone. It just makes sense to spend a couple of hours learning and preparing before you call your bank-it is time well spent if you can increase your chances of approval.

What About Limitations? Property investors are out of luck when it comes to getting their mortgage loan modified. Any prospective person for loan modification will have a credit check run on them to verify their primary address. You also need to check who insures your loan, since only loans owned by Fannie Mae and Freddie Mac participate in the program. Each organization has an 800 number you can call to check on your loan. How Can I Get a Loan Modification? The first step if you are considering loan modification is to talk to a HUD-approved financial counselor. Many different counselors, all free of charge, will work with you to understand your financial situation and recommend what you should do next.

Learn more about Obama Mortgage Relief Plan Qualifications.