According to the latest reports, the president’s administration has introduced its new plan to assist millions of homeowners in refinancing their mortgages according to extremely low rates noticed nowadays.
The new project, that needs to be approved by Congress, would allow the people who are in their mortgage, to save about $3.000 per year as a result of refinancing into loans subsidized by the Federal Housing Administration, as it was indicated by the U.S. Department of Housing and Urban Development.
Obama’s Housing Policy
The new project’s budget is estimated between $5 billion and $10 billion. As the president said he didn’t intent to add to the deficit in order to finance the project. As an alternative, he proposes to impose fees on large banks, which could cause negative reaction from past Congress members who have previously rejected the idea of taxing the banks.
However, the refinancing project is far from being the first in a series of programs developed to revive the nation’s crisis in the housing market. 3 years ago, the president disclosed his Home Affordable Modification Program for preventing foreclosure. The program was later followed up by the Home Affordable Refinance Program designed to assist homeowners owing more on their houses that they really worth in refinancing their loans. However, in fact the two programs meant to help 9 million of homeowners who used loans from government-financed Freddie Mac and Fannie Mae, have hardly helped some 2 million of them.
The main difference of this latest program is that it will provide help for the borrowers having private, non-government bank loans, who didn’t succeed in getting new refinanced loans earlier because their mortgage debt was higher than the real cost of their homes. Some of these borrowers have previously used cash advance loans online to manage the monthly payments on their mortgages.
In his speech for Falls Church, VA, made on Wednesday, Obama said that the new plan will help those who are “underwater” through no fault of their own.
The New Refinancing Criteria
In order to qualify for the new refinancing program, the borrowers must have regularly paid their mortgage bills for at least half a year, and have only one overdue payment during the pervious six months. It is also necessary to have a credit score of 580 or higher. The administration mentioned that 9 of 10 borrowers meet these criteria.
What is important, the balance of the borrower’s mortgage cannot exceed the limits for FHA-insured loans referred to their communities. The limits vary from $271,050 in the areas with low housing costs, up to $729,250 in the ones with high costs. The borrowers must also be owners and live in the house covered by the loan.