The Scoop on Obama’s Refinancing Initiative

Lately the most difficult problem facing home owners who wish to refinance their homes its their lack of 20% equity in their home. Many home owners find themselves in this position because they:

purchased with little or no money down
neighborhood values have depreciated or remained flat
borrowed or refinanced recently

Actually any or all of the above reasons could be blocking the home owner’s ability to refinance at today’s very low interest rates.

There may be a solution!

Obama’s Housing Stimulus Plan has a provision that may help home owners in this situation, if they meet the following criteria:

must have conforming loans which are guaranteed by Fannie Mae and Freddie Mac
Owe up to 5% more than their home is worth
must be “credit-worthy” or “responsible” homeowners

If home owners meet the above criteria, they can refinance into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties (yeah!) or balloon payments.

For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.

At the time of this writing, details about this initiative will be released at a future date – including what, if any, credit score requirements will be included.

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