Four things that every home owner must know about second mortgages, the Stimulus Program, and how it is guaranteed to help them stay in their homes.
Basics of the Stimulus Program
The purpose of the Stimulus programs for home owners is to keep people in their homes, rather than risking massive inflation in the housing market because few people can afford to own their own home. If you have owned your home since before January 1, 2009, you live in the home and you have verifiable income, there is a chance that you will be able to take advantage of the stimulus. It is most advantageous for homeowners who have fallen behind on their mortgage payments, although being behind is not a requirement.
Do All Lenders Have to Adhere to the Stimulus?
No. Only lenders who have received federal bail out money under the Stimulus Plan are required to extend the new programs to it’s current borrowers. Lenders who have not received bail out money can extend the programs, but again they are not required to do so.
How the Stimulus Works
If you apply for refinancing under the stimulus plan, a lender is required to set your payment no higher than 38% of your monthly income. There are multiples methods that lenders use to reach the required percentage. They sometimes will forgive a portion of the mortgage and refinance a new total amount. Other times, the loan period may be extended. For instance, a home owner with a 15 year mortgage may move to a 30, or even 40, year loan repayment period. After the lender meets their requirements, the government extends aid to the borrower until the payment is reduced to only 31% of their monthly income.
What about Second Mortgages?
Second mortgages in themselves are generally not considered eligible for the Stimulus, at first glance. How lenders have gotten around this, is to wrap the primary and second mortgages into one loan that meets the requirements of the Stimulus program in order to help consumers. Doing so is also beneficial for the lender, who receives additional funds from the government for eliminating the borrower’s second mortgage.
*Affects pricing. With the No Closing Cost
Option, borrowers finance the closing costs instead of paying for them at
closing. Borrowers who pay closing costs at closing may qualify for a lower
interest rate. Some upfront fees (ex. credit report and appraisal) may apply
and may be credited at closing.
*Refinancing or taking out a home equity loan or line of credit may increase
the total number of monthly payments and the total amount paid when compared to
your current situation.
Copyright MortgageLoansBadCredit.com, All Rights Reserved
