Obama's "Home Affordable Plan" - Know Which of Your 3 Options Is Right For Yo

By: Lindsy Emery

Worried homeowners may be eligible for financial assistance with President Obama's Home Affordable Plan. The Treasury Department is allocating $75 billion to help end the foreclosure crisis. If you are stressed by your mortgage payment. Learned about the options and discover which one could give you the help you need.

Obama's plan, option number one, allows homeowners to refinance their existing mortgage using current low interest rates. Borrowers who are eligible under this plan may not be delinquent on their mortgage, and may not owe their land or greater, then a 105% of their home's current market value. This option applies only to the first trust deed. Homeowners to have a second loan must get their second lender to agree to this program, which guarantees that the first loan's lender will be paid first.

Obama's plan, option number two, is a loan modification program, offering eligible homeowners interest rate reductions as low as 2%, extension of loan terms to as long as 40 years, and some deferral of principal on their first trust deeds. Option number two, allows homeowners a target payment equal to 31% of their gross monthly income. For those homeowners with a second loan on their homes, this plan also modifies that none with interest rates as low as 1% or 2%. The debt may even be retired entirely in some cases.

Lenders benefit as well with this option, as the Treasury Department is paying them an incentive for each completed loan modification. Borrowers who maintain their new modified payment plan will also benefit, with payments totaling up to $6,000 over the next five years. If your home is not eligible for refinance. Due to a delinquency, or owing to much on your home, the Home Affordable Modification might work for you. Before you contact your lender to apply, be sure that you understand the conditions for approval, and prepare your application accordingly. By knowing the criteria, and preparing your application correctly, you are more likely to be accepted by your lender for this option, so take your time before you make the call.

Obama's plan, option number three, is a deed in lieu of foreclosure, or short sale. For mortgages where the proceeds are less then the remaining amount to be paid on the property, the government will pay lenders $1000 for allowing a short sale. Likewise, the government will share in the expense of eliminating second liens against the property. If a short sale is not possible, the borrower can turn over the keys, to transfer the house without foreclosure proceedings. Such homeowners could be eligible for $1500 in relocation expenses.

To summarize, all three options include financial incentives that motivate lenders to work with their borrowers to find a quick solution. Even so, not every homeowner will qualify for this comprehensive program. If you are experiencing financial stress due to a high mortgage on your home, learn about the options under this program to determine your eligibility. It takes time and effort to prepare before you contact your lender, in order to succeed.

The government is discouraging third-party middlemen who charge large fees for their services. So rather than contacting a loan modification company, learn as much as you can before you contact your lending institution about President Obama's Home Affordable Plan. Help is on its way, but only if you know how to qualify. Good preparation gives you the best possible chance of getting your finances back on track.

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For essential tips and facts about how to get approved for a Loan Modification - visit my simple, no nonsense loan modification guide and resource: Home-Loan-Modifications.info

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