How to Use the Stimulus Plan to Help Refinance a Home
In 2009, the Obama administration introduced the Making Home Affordable refinance program as part of a plan to help stimulate the American economy. This refinance opportunity allows borrowers with a conventional home loan underwritten by Fannie Mae or Freddie Mac to refinance their debt to a lower interest rate and/or monthly payment with no closing costs, if their home has lost value in the real estate market.
- Difficulty:
- Moderate
Instructions
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1
Answer four questions to see if you may qualify for a Making Home Affordable refinance: Are you the owner of a one- to four-unit home? Do you have a loan owned or guaranteed by Fannie Mae or Freddie Mac? Are you current on your mortgage payments? Do you believe that the amount you owe on your first mortgage is about the same or less than the current value of your house? If you answered "yes," you could qualify.
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2
Contact Fannie Mae at 1-800-7FANNIE or FannieMae.com/loanlookup and Freddie Mac at 1-800-FREDDIE or FreddieMac.com/mymortgage, if you are unsure if you have a Fannie Mae or Freddie Mac mortgage.
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3
Contact your current mortgage servicer if you are qualified for a Making Home Affordable refinance. The contact information should be on the front page of your monthly mortgage statement.
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4
Apply with your lender for the refinance. You may be required to provide up-to-date information, such as pay stubs, bank statements and income tax returns.
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5
Fill out all disclosures once approved to close your mortgage. These documents will either be sent directly to you or to a closing agent, depending upon the real estate laws in your state.
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1
Tips & Warnings
To streamline the process, it may be easier for you to apply online through the MakingHomeAffordable.gov website. If your mortgage is with a participating lender, you will be sent to the correct site to process your loan request.
A borrower can refinance up to 125 percent of his home's value with this program. If your loan has lost more equity than that due to the economy, you may not be able to refinance your mortgage through this program.
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References
- Photo Credit $100 house image by Paul Heasman from Fotolia.com
