Understand Obama's Rescue Plan and Avoid Losing Your Home

Situ Gintung Dam Collapse

Tanggerang, Jakarta Indonesia March 27 2009



By Charlie Mitchell

The current economic situation has seen house prices tumble and has left homeowners reeling. Many people now owe more on their mortgage than their house is worth and the number of foreclosures has reached an all time high. In an attempt to make life easier for homeowners President Obama has introduced the Housing And Homeowner Stimulus Plan. Read on to find out whether you qualify and how you can take advantage of this support.

Qualification 1 - Proof Of Financial Hardship

In order to qualify for a loan modification you need to prove to your lender that you have suffered from a financial hardship and are now unable to make your home loan repayments. The reduction in your house price is not a sufficient reason. However if you have lost your job, been divorced or suffered an illness which incurred medical expenses then you could qualify.

Qualification 2 - Proof You Can Meet New Payments

Your lender will want to know that you can meet the new repayments if your mortgage is modified. Use financial statements to prove how your new income situation can cover the repayments.

Qualification 3 - Complete The Paperwork Properly

Spend the time making sure your application is properly completed. If you submit an incomplete, or incorrectly completed form you risk having your application denied.
Once you have confirmed that you qualify under the new scheme you will be able to take advantage of the following support to ensure you don't lose your home.

Advantage 1 - Reduce Your Monthly Repayments

If you ask your lender to restructure or modify your home loan the maximum you will be allowed to pay for your mortgage payment is 38% of your gross monthly income. Many people currently pay half of their income in mortgage payments so this reduction could save you a lot of money each month and make it easier for you to pay other bills and living expenses.

In order to make your monthly repayments more affordable the mortgage lender will extend the term of your mortgage. In some cases is could extend up to 30 years.

Advantage 2 - Reduce Your Interest Rate

Ask your mortgage lender to refinance your home loan at a lower interest rate. This will make your monthly repayments more affordable and reduce the amount you have to pay over the life of your home loan.