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How the Stimulus Plan May Affect Your Mortgage

By
Real Estate Agent with RE/MAX 1st Realty


 

Now that President Barack Obama’s $787 Billion Economic Stimulus Bill has been signed into law and will take effect on March 4, many American homeowners are anxiously wondering how this bill may affect the housing market. Despite primarily focusing on bolstering the economy by creating jobs and reviving spending, the bill includes steps to revitalize this critically important segment of the American economy. But what impact will the stimulus package directly have on your mortgage?

President Obama’s plan, called the American Recovery and Reinvestment Act, is designed to address two different groups of homeowners: those who are current on payments but have high interest rates and not enough equity to qualify for refinance, and those who are at risk of losing their homes. The plan also intends to provide $200 billion in additional financial backing to Fannie Mae and Freddie Mac to increase money available for home lending.

These steps will directly help homeowners and new home buyers seeking a new mortgage, says Michael Isaacs, president and CEO of Residential Finance Corporation (www.residentialfinance.com), a nationwide mortgage lender specializing in FHA refinances. “The stimulus package aims to make money more readily available for lenders to help those who are currently in need,” says Isaacs. “The American Recovery and Reinvestment Act will directly help those seeking to refinance out of bad mortgages as well as those looking to become homeowners for the first time.”

Anonymous
Don

I have a 2 year old 7-year-ARM at 6.675% with 100% financing (nothing down). I am current with my payments and my credit score is near 800. The mortgage is financed through a Credit Union. Based on a neighbor's appraisal, an appraisal on our property will show a value about 5-10K below what we currently owe. Will the act allow me to refinance this loan as a fixed rate loan? If so, what will I need to do?

Mar 09, 2009 06:31 AM
#1
Spencer Cole
RE/MAX 1st Realty - Roanoke, VA

Don,

 

It sounds like you are a perfect candidate to refinance right now. I just urge you not to "cash out" if offered. I also urge you to use a local lender as opposed to an online broker where you can easily get lost in the mix. Are you in the Roanoke area?

Mar 09, 2009 10:28 AM