The Obama Administration has announced more details of the new Making Home Affordable plan that helps homeowners who are struggling to pay their mortgage or want to refinance, but owe more than their home is worth. Here are some FAQs about the plan:
Q: Can I refinance through the Making Home Affordable plan if home prices have dropped in my area and I owe a bit more on my mortgage than my home is worth?
A: The Making Home Affordable plan allows borrowers to refinance with a loan-to-value (LTV) ratio as high as 105 percent. For example, if your house was worth $300,000, you could qualify to borrow $315,000.
Q: ...If I made a late mortgage payment eight months ago because I was on vacation for a week?
A: The Making Home Affordable plan only requires that you haven’t made a payment more than 30 days late in the last 12 months.
Q: ...If I don’t know which lender owns my loan?
A: The Making Home Affordable plan is open to borrowers whose loan is owned or guaranteed by Fannie Mae or Freddie Mac. The easiest way to find out whether your loan meets that requirement is to call a lender and ask. If you want to do your own research, you can call Fannie Mae at (800) 7FANNIE and Freddie Mac at (800) FREDDIE.
Q: ...If I moved out of my home?
A: The Making Home Affordable program is open to owners of vacation homes and small rental properties as well as homeowners who occupy their home as their primary residence.
Q: ...If my credit isn’t very good?
A: Fannie Mae and Freddie Mac both offer a lot of flexibility on credit scores for borrowers who want to refinance through the Making Home Affordable plan.
Q: How many people will be able to refinance through the Making Home Affordable plan?
A: The federal government estimates that as many as 4 million to 5 million additional borrowers may be able to refinance through the Making Home Affordable plan.
Q: The Making Home Affordable plan doesn’t fit my situation. What other options do I have?
• If you have some equity in your home and reasonably good credit, you may be able to refinance through a conventional loan program. You can begin shopping for a loan through LendingTree.
• If your loan is insured by the Federal Housing Administration (FHA), you may be able to qualify for a streamlined refinancing that doesn’t require an appraisal. Contact your lender for more information.
• If you’ve experienced a financial hardship, you might be able to get a loan modification through the Making Home Affordable plan.
• If you want to buy a home, you might be able to qualify for an $8,000 first-time home buyer tax credit on your federal income tax return.
Q: How can I find out more?
A: The best way to get more information and find out whether you can qualify to refinance your mortgage is to discuss your situation with a lender. You can also check out the federal government’s Making Home Affordable website.