This is a common question which homeowners, who are upside down on their mortgage, ask in the forums. Recently, the Obama administration has come up with 2 types of programs which would make mortgage affordable around 9 million homeowners: refinancing and loan modification.

Special refinancing program: This is a special program which will help people to refinance their mortgage into cheaper loans. It is also known as Home Affordable Refinance. To qualify for this program, your loan must be backed by Fannie Mae or Freddie Mac. Moreover, the first mortgage on your home cannot exceed 105% of the current value of the property.

Loan-modification program: The loan modification program is designed for those who do not qualify for the special refinancing program. The modification must take place by December 31st, 2012. Lenders can reduce the interest rate of the borrowers to as low as 2%. They can even extend the loan term to 40 years. As the lenders modify the loan terms of the borrowers, the government will provide them with incentives for this.

In order to qualify for this program, the loan must be originated on or before January 1st, 2009. The home should be the primary residence of the borrower. Apart from this, the principal balance cannot exceed $729,750. Moreover, the borrowers will have to document their income. They should also sign an affidavit of financial hardship.

You can also visit http://makinghomeaffordable.gov/ and directly check whether you qualify for these programs.

Tags: Federal mortgage assistance programs, Home Affordable Refinance, loan modification program

This entry was posted on Monday, April 13th, 2009 at 11:22 pm and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.