| With the emergence of the new Making Home | | | | longer qualify. This is through no fault of their own, and |
| Affordable plan enacted by Congress in March 2009, | | | | that's why the Hope for Homeowners act was |
| lots of people with a hard time making their monthly | | | | created. By refinancing affordable fixed-rate |
| mortgage payments are wondering about their options | | | | mortgages made possible by equity sharing, buyers |
| for keeping their houses. One question they have is | | | | can avoid foreclosure. |
| how they can benefit from the new loan modification | | | | Equity is the value that you have paid down on your |
| program vs. FHA refinancing. | | | | home loan. By refinancing with the Hope for |
| The first thing to understand is that under the Making | | | | Homeowners program, you agree to split the equity in |
| Home Affordable plan, only mortgage loans backed by | | | | your home with the FHA in the event that you sell the |
| Fannie Mae or Freddie Mac can be modified or | | | | home. The scale depends on the length of time since |
| refinanced. The government is currently working to | | | | the refinance occurred: if you sell within the year, then |
| add similar loan modifications to FHA and VA loans, | | | | 100% of the equity belongs to the FHA. If you sell |
| but hasn't passed any new legislation yet. | | | | more than 5 years later, you split the equity 50-50. |
| If the current financial crisis is making you unable to | | | | Hope for Homeowners refinances are available until |
| make your mortgage payments, you have a few | | | | September 20, 2011. |
| options open to you. Two of those options are loan | | | | If your loan is insured by either Fannie Mae or Freddie |
| modification under Making Home Affordable and FHA | | | | Mac, look into loan modification through the Making |
| refinancing. Which you take advantage of really | | | | Home Affordable plan. Loan modification is different |
| depends on who insures your specific loan. If you're | | | | from traditional refinancing. Lenders have to follow a |
| not sure, call your lender and ask. | | | | set series of steps to reduce your monthly payments |
| If your loan is insured by the FHA, look into their Hope | | | | to 31% of your monthly income, starting by reducing |
| for Homeowners refinancing program. Traditional | | | | your interest rate. They receive incentives from the |
| refinancing requires people to have at least 20% equity | | | | Making Home Affordable initiative for doing this, and if |
| in their homes before they refinance, but because | | | | you can make and keep your commitments under a |
| house prices have fallen so dramatically recently, many | | | | modified loan you will receive incentive payments from |
| homeowners have lost so much equity that they no | | | | the government plus stay in your home! |