Obama's Home Refinancing Explained
Many homeowners are having trouble with their mortgage due to financial problems and a tough housing market. However, help is available from President Obama's HARP (Home Affordable Refinance Program) stimulus. This stimulus plan is designed to help struggling homeowners with new home loan modification and mortgage refinancing options that would make the monthly loan payment amount much more affordable. Here is an explanation of Obama's home refinancing stimulus program and how it can help a struggling homeowner regain control of their financial situation.
This stimulus plan consists of two main parts:
-HARP
The HARP option is strictly for homeowners looking for mortgage refinancing options. This option allows a homeowner to get a new home loan, with better interest rates or conditions, and replace their existing loan with it. This program can also be used to extend the length of a home loan for up to 40 years in length. The longer a home loan, the cheaper the monthly payment is.
-HAMP
The HAMP (Home Affordable Modification Program) stimulus plan exists for homeowners who simply want to modify their existing home loan. Loan modification will allow a homeowner to reduce their interest rates and lower the overall amount due on the mortgage. This will lead to a lower monthly payment amount. This program, like HARP, also offers homeowners 40 year mortgage repayment options.
Each program has its own benefits but each homeowner has a different financial situation or goal. Depending on credit history, current financial status, and other related information, one program may be better for a homeowner than the other. Typically, mortgage modification is the better option due to lower upfront costs, but it is harder to get approved for. Mortgage refinancing is easier to get, but costs more upfront due to the fees and costs associated with essentially getting a new home loan. There is no universal answer for a homeowner, that is why these two different plans exist.
These plans ultimately exist to help struggling homeowners regain control of their finances, help the struggling housing market, and provide an overall boost to the economy. Also, since the Obama administration knows homeowners are struggling, this plan was designed to approve homeowners in nearly any financial situation for a new low interest rate mortgage with monthly payments that are actually affordable. Mortgage refinancing and modification options have always existed, they just have not been available from the Government on such a huge level before. They have also never been easier to get approved for.
Homeowners are being encouraged to at least evaluate their situation, and the Obama home refinancing program, to see if they would benefit from taking advantage of it. Literally millions of homeowners are now able to lower their monthly mortgage payments, and save a substantial amount of money, because of the new mortgage modification and refinancing stimulus plan options. Homeowners should take action and take advantage before the plan has too many applicants and expires.
