I have been asked many questions about President Obama's Homeowner Affordability and Stability Plan, and would like to share some information regarding the plan and how it will work. Like many government programs and documents, the plan may be hard to understand sometimes. Let me break it down for you:
The program is broken doen into two (2) areas:
1. The Home Affordable Refinance
2. The Home Affordable Modification
The Home Affordable Refinance
- If the home you want to refinance is your primary residence,
- The loan on your home is controlled by Fannie Mae or Freddie Mac (it must be a conforming loan — you can call Fannie at 1-800-7FANNIE and Freddie at 1-800-FREDDIE or submit online forms with Fannie and Freddie)
- If you’re current on your mortgage payments (meaning you haven’t been more than 30 days late on your mortgage in the last 12 months)
- If you have sufficient income to support a new mortgage….. then, you might qualify.
It gets a little more complicated however: You can’t be too far underwater on your mortgage (owe more than the home’s market value) to qualify for the refinance.
What Do I Need to Provide?
- If you think you might qualify to refinance, you’ll need to give the following documents to your mortgage lender:
- Your monthly gross (before taxes) income of your household, including recent pay stubs.
- Your last income tax return.
- Information about any second mortgage on the house (you can only refinance your first mortgage under the plan, but having a second mortgage won’t automatically exclude you).
- Account balances and minimum monthly payments due on all your credit cards.
- Account balances and minimum monthly payments for all your other debts, like student loans or car loans.
This part of the Obama housing plan has not been released yet. It’s possible that lenders are expected to use their traditional procedures, but it hasn’t been officially stated.
When Will This Help Me? When it comes to refinancing under the Making Home Affordable plan, patience is going to be a virtue. With so many homeowners in some sort of distress (one in six American homeowners has negative equity, and foreclosures and home values fell 11.6% nationwide last year), there is likely to be a flood of applications and queries for lenders.What If I Don’t Qualify to Refinance?
Don't give up. You may still qualify for other programs.