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Guest Post: Do you Qualify for Obama’s Refinance Program?
In March 2009 President Obama launched a mortgage assistance program designed to help struggling home owners keep up with the mortgage payments and avoid painful foreclosures. The program got extended due to its success, and you may still qualify today.
How to know if you are eligible for the Making Homes Affordable Program?
Just answer 4 simple questions:
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Is your home your primary residence?
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Is the amount you owe on your first mortgage equal to or less than $729,750?
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Are you having trouble paying your mortgage?
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Did you get your current mortgage before January 1, 2009?
If you answered yes to all, you will most likely qualify for a Home Affordable Refinance Program (HARP).
Keep in mind that vacation and commercial properties are not included in the program. The property you are refinancing must be your primary residence, such as a house, a condo, a town house, a co-op or a manufactured home.
Mortgage refinance rates with the Home Affordable Refinance Program go as low as 2% – the lowest in the country.
To learn how to save on monthly mortgage payments with refinance visit the Making Homes Affordable website at www.makinghomeaffordable.gov
Will I Save Money with Refinance?
In order to reap the best returns on refinancing, make sure that the new interest rate is at least 2% lower than your current rate; you must also know in advance that you will live in your home for the next several years. If you are planning on moving out in a year or two, then do not refinance, since the process will not save you any money, and may actually leave you with a negative. Mortgage refinancing is a long term savings strategy, not a quick fix, although an instant difference in monthly payments can be felt right away.
To calculate the amount you will save on a mortgage refinancing, find out your closing costs. Once you know the closing costs, combine the monthly savings until you reach the closing costs sum. Then count the months it took your new savings to cover the closing costs and you will know the break even period.
For example, if your old mortgage payment was $1,442 and your new payment is $1,003, then your monthly savings after mortgage refinancing are $439. If the closing fees were $4,500 it will take approximately 10 and half months to break even, after which you will truly start saving money.
Your Home is NO ATM
A big mistake many people made, is they used their home like an ATM machine to pay for fancy cars, vacations, renovations and other joys of life. It is all fun, no doubt, but if it’s not your money – don’t spend it, because in the end the debt will come back to bite in your bottom. It has in fact bitten thousands of people, who were either reckless with their home equity or who opted for high risk mortgages such as interest only and balloon home loans. Don’t touch your home equity, unless you really have to (kids education, medical bills, or emergency issues).
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Here’s an excellent guide to help you understand how Loan Modification works and how it could help you: http://www.modifyingmadeeasy.com