| A perfect storm for home buyers that brings with it | | | | the value of their home. The only option for the |
| a large decline in home values denying many | | | | couple would be to pay a considerable amount of |
| homeowners the right to refinance to a lower rate. | | | | money towards their loan balance to bring down the |
| All around the United States millions of homeowners | | | | Loan-To-Value Ratio to meet the underwriting |
| are underwater on their homes and can not | | | | guidelines. However, just like many people around the |
| refinance. Obama's new plan, Homeowner | | | | country, the couple does not have the spare change |
| Affordability and Stability Plan (HASP), brings with it a | | | | in their bank account to pay for this refinance. Millions |
| beacon of hope for struggling homeowners that are | | | | of people around the country are facing similar |
| trying to make ends meet. | | | | situations and many are worse off due to job loss. |
| Take for example a couple who bought there home | | | | Being able to refinance into a lower rate would |
| a few years ago during the housing boom. They paid | | | | drastically help many Americans make ends meet. |
| $400,000 for their lovely 4 bedroom home. They put | | | | Luckily, the Obama Refinance plan allows the |
| down $40,000 dollars or 10% and financed the rest. | | | | borrowers to refinance their home for a lower |
| On their $360,000 loan they got a rate of 6.50% | | | | interest rate. Under the new plan, homeowners will |
| which is fixed for 30 years. Now fast forwarding to | | | | be able to refinance up to 105% of their home value. |
| today we see interest rates on mortgages at really | | | | In this example, the couple owes $350,000 which is |
| low levels. This couple could be eligible for a rate of | | | | less than 105% of their $340,000 home. The couple |
| 5.25% for a 30 year fix, however their home which | | | | will be able to discuss lower rates with lenders and |
| was valued at $400,000, when they first bought it, is | | | | save over $500 a month. The plan is effective as of |
| now valued at $340,000. I know a lot of people that | | | | now and homeowners have until June 2010 to get in |
| are reading this article can relate to this shear drop in | | | | on this plan. The guidelines for the plan are that |
| home price. As of today, the couple has paid $10,000 | | | | homeowners must be in good standing and their |
| towards the principle loan balance leaving them with | | | | mortgage must be owned by either Fannie Mae or |
| $350,000 left on their loan. The couple can not | | | | Freddie Mac. |
| refinance because there loan amount is greater than | | | | |