Just came across a good article by Eric Banks in ezine. I thought I would pass this on since this issue has become a huge problem today. It is epidemic! Mortgage default has become rather prominent among homeowners these days. This is happening everyday and every neighborhood. Some people choose to just walk away. Some of these people have no other choice. With lock periods expiring on adjustable rate mortgages, lay-off's taking place almost every day and a million bad loans sold in the past few years, it's no wonder that many homeowners are struggling to make their payments.
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Eric Banks...
The Obama Government has announced a stimulus package 2009 to save the homes of the US people in several ways. One of the key strategies used under this plan is refinancing & loan modification. As the plan suggests, there are special loan modification and refinance packages for the loans owned and / or insured by the Fannie Mae & Freddie Mac. Now, along with the institutions own directives, the two are mainly following the guidelines set by the Federal Government. Does your home loan qualify for refinancing with Fannie Mae? Who will qualify for Refinance with Fannie Mae? Here are some pointers that would elaborate the criteria for qualification of borrowers to refinance with Fannie Mae :
· As per the Federal Government directives in case your mortgage amount exceeds 105% of the current market value of the home in consideration, your loan is eligible for refinancing. Then your rate of interest would also reduce from 6% to 5%.
· There are no minimum income requirements to qualify for the Fannie Mae refinance package. What you require is to prove that you have a steady income in the past three years. Also you would be required to prove that you have consistently paid almost all the bills on time. When you make these records the following would be treated as the sources of income: Seasonal pay, retirement pension payments, child support, VA benefits, military pay, unemployment compensation, alimony, Social Security income, rent paid by the family, etc. Further on the list of income are part time pay, over time, bonus pay, etc.
· The Federal Housing Administration (FHA) allows you to use 29% of the income towards the housing costs and 41% for the housing expenses & other long term debts. Hence, the debt income ratio is utmost important. One can exceed the ratio in case of the following:
- You pay a large down payment.
- You demonstrate the ability to pay more for the housing expenses.
- In case you have substantial cash reserves.
- The net worth is enough to repay the mortgage irrespective of the income.
- You have evidences of acceptable credit history or usage of limited credit.
- In case you pay less than the maximum mortgage terms.
- In case funds are being provided by some organization.
- Or you have a decrease in the monthly housing expenses.
President Obama has offered $1000 incentive for home owners that opt for Loan Modification instead of Short Sale Or Foreclosure.
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