Posted byon March 5, 2009
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The details for the Homeowner Affordability and Stability Plan were released yesterday. The new title of the program is “Making Home Affordable.”
There are two components for home owners, refinancing and loan modifications. Participation is voluntary and the lender has to choose to participate. Details of both plans are below.
Borrowers who haven’t been able to refinance because their home value decreased now have an option to refinance into a 30 or 15 year, fixed rate loan.
Eligibility is as follows:
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Requirements for the loan modification program are:
The loan modification will lower the interest rate to make the payment (principal, interest, taxes, insurance, and home owners association dues) 31% of income. After five years, the rate will adjust 1% each year until it reaches the prevailing market interest rate on the date the modification.
In addition, there may be an incentive payment for borrowers for on time payments. Over five years the total principal reduction is up to $5,000.